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Local private equity firm unveils $316M investment fund

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The state’s largest private equity firm has finished raising $316 million for its biggest investment fund to date, company officials told IBJ on Wednesday.

Hammond Kennedy Whitney & Co., based in Indianapolis with an office in New York, finalized its latest investment pool on March 31.

Dubbed HKW Capital Partners IV, the fund follows in the footsteps of the firm's $255 million round that ended in late 2007. That fund went toward acquiring 14 companies. An earlier $100 million fund also acquired 14 companies.

With the latest fund, HKW is following its historic strategy of acquiring controlling interests in North American companies in the energy services, infrastructure and medical products industries. It is targeting those sectors because they all have growth projections that well exceed forecasts for the broader economy, said Chairman Glenn Scolnik.

Key drivers for medical products include aging Baby Boomers and their growing demand for health care, Scolnik said. On the energy side, horizontal drilling and North America’s push for energy independence have created openings for support services in which the equity firm invests.

Eighty-one percent of investors in HKW Capital Partners IV were institutional entities, the firm said. That included six insurance companies, four fund-of-funds, two state pension funds, one private-university endowment and a handful of individuals. HKW did not disclose the other investors.

One of the fund-of-funds was AlpInvest Partners, which invested with money it manages for the Indiana Public Retirement System pension fund.

HKW describes its acquisition focus as “lower middle-market companies.” The firm generally invests in companies that report between $20 million and $200 million in annual revenue and $5 million to $30 million in earnings before interest, taxes, depreciation and amortization.

Among other requisites, the firm says it looks for “honest and talented management teams," low risk of “technological obsolescence,” and defined growth plans showing sustainability.

Companies must indicate significant growth ahead of them. Owning most of the market share could hurt odds of getting an investment from the firm, because that means there may be little room to grow.

“We’ve passed on a lot of companies that were wonderful companies that didn’t have any prospects for growth,” Scolnik said.

The age of a company doesn’t directly factor into HKW’s investment decisions, said partner Jim Snyder. But the firm steers away from startups and groups that could burn through cash.

“We want companies that have a history of profitability,” Snyder said.

The firm usually spends four to five years building capital for a fund, Scolnik said, and maintains its stakes in individual companies four to five years before divesting.

HKW began investing money from the new fund in November 2012 to acquire a stake in Brant Instore Corp., a Canadian business that offers screen and digital printing, and distribution.

Since then, HKW has invested in three others: Mobile Tech Inc. in Oregon, Specialized Desanders Inc. in Alberta, Canada, and EnerSafe Inc. in Texas.

 

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  1. If I were a developer I would be looking at the Fountain Square and Fletcher Place neighborhoods instead of Broad Ripple. I would avoid the dysfunctional BRVA with all of their headaches. It's like deciding between a Blackberry or an iPhone 5s smartphone. BR is greatly in need of updates. It has become stale and outdated. Whereas Fountain Square, Fletcher Place and Mass Ave have become the "new" Broad Ripples. Every time I see people on the strip in BR on the weekend I want to ask them, "How is it you are not familiar with Fountain Square or Mass Ave? You have choices and you choose BR?" Long vacant storefronts like the old Scholar's Inn Bake House and ZA, both on prominent corners, hurt the village's image. Many business on the strip could use updated facades. Cigarette butt covered sidewalks and graffiti covered walls don't help either. The whole strip just looks like it needs to be power washed. I know there is more to the BRV than the 700-1100 blocks of Broad Ripple Ave, but that is what people see when they think of BR. It will always be a nice place live, but is quickly becoming a not-so-nice place to visit.

  2. I sure hope so and would gladly join a law suit against them. They flat out rob people and their little punk scam artist telephone losers actually enjoy it. I would love to run into one of them some day!!

  3. Biggest scam ever!! Took 307 out of my bank ac count. Never received a single call! They prey on new small business and flat out rob them! Do not sign up with these thieves. I filed a complaint with the ftc. I suggest doing the same ic they robbed you too.

  4. Woohoo! We're #200!!! Absolutely disgusting. Bring on the congestion. Indianapolis NEEDS it.

  5. So Westfield invested about $30M in developing Grand Park and attendance to date is good enough that local hotel can't meet the demand. Carmel invested $180M in the Palladium - which generates zero hotel demand for its casino acts. Which Mayor made the better decision?

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