Vestar seeks expansion after Roland acquisition, Manna Tree takes over larger stake in Verde Farms

Good morning, PE Hubsters!

Rafael Canton here with the Wednesday Wire. It’s a consumer-centric Wednesday with a few deals in the industry to talk about. One of my industry beats for PE hub is about consumers and retail, so it’s the perfect topic of conversation for this morning.

First, we will take a closer look at Vestar Capital Partner‘ plan add-ons after a recapitalization of Roland Foods.

Next we take a look at Manna Trees recent deal to acquire a majority stake in Verde Farms.

Finally, we will announce the deal. Black Bay Energy Capital has agreed to sell Piñon Middle Currenta gas company based in Houston, Enterprise Products for 950 million dollars.

Search for add-ons

Since there is an opportunity to expand the company through acquisitions and to plan a future exit after 11 years of ownership, Vestar Capital Partner recapitalized Roland Foods earlier this month. To learn more about the company’s add-on strategy for Roland, PE hub obtained Ken O’KeefeManaging Director and Chief Operating Officer of Vestar.

Roland is a global importer and supplier of branded and specialty foods. The majority of its customers are food wholesalers, some of which are specialty retailers and restaurants. The company sources over 2,500 products imported from 40 countries and 350 suppliers, including roasted peppers, artichokes, balsamic vinegars, olives, quinoa and tahini.

O’Keefe said Roland is looking to expand its capabilities through acquisitions in core or adjacent product categories that have high growth characteristics, reasonable margins and brand appeal, are light on fixed assets and can also benefit from Roland’s platform and infrastructure. Roland is also looking to expand its offerings into high-growth menu offerings that it does not currently offer. These include Southeast Asian, Latin American, Middle Eastern and African products. Geographically, Roland may also consider expanding into Canada.

Vestar sees the opportunity to complete several add-on deals for Roland in the future. “We have a solid pipeline of potential acquisition targets that support our overall growth strategy and value proposition to our customers,” said O’Keefe. “I would be disappointed if we did not complete several acquisitions in the coming years.”

Roland’s capital structure was expiring and it had limited flexibility to achieve its growth goals, said O’Keefe, a member of Roland’s board of directors. A recapitalization was consistent with Roland’s growth plans.

There are currently no plans for an exit. But the recapitalization and Vestar’s plans for future acquisitions could better position Vestar for a future exit. “We believe Roland’s business model, management team and past and future growth prospects will be attractive to many types of investors in the future, including other private equity sponsors and strategic buyers,” O’Keefe said.

Read on to learn more about the details behind the summary.

Optimistic about better for you

Now we move from gastronomy to the category of healthier foods with PE Hubs Iris Dorbian. Since the pandemic, consumers have turned to healthier and more sustainable food options, writes Iris. Private equity has increased its focus on certain recession-resistant sectors, while deal activity has slowed, leading to interest in the “healthier for you” category.

Recently, Manna Tree Partner acquired a majority stake in Verde Farmsan organic beef brand based in Woburn, Massachusetts. Manna Tree first invested in Verde Farms in 2020. Manna Tree targets companies focused on improving human health.

Iris spoke with Steve YoungManaging Director at Manna Tree to hear more about the company’s goals with the investment and why Manna Tree is so bullish on the healthier food sector. Here’s a selection of what Young had to say about the investment.

Why was Manna Tree interested in Verde Farms?

Verde Farms is a perfect fit with our mission at Manna Tree to improve human health through innovative nutrition and food companies. The company is a leader in the organic, grass-fed beef market, offering consumers a more nutritious and sustainable protein option. The healthier beef segment is experiencing remarkable growth, outperforming conventional beef by nearly three times, making Verde an attractive investment opportunity.

Why did Manna Tree want to acquire a majority stake in Verde Farms?

We have been very impressed with the opportunity for the company since our initial investment in January 2020. By taking a majority stake, we can now play an even more active role in driving Verde’s growth and expansion. We see tremendous potential in the company and believe our expertise and resources can help accelerate its success in the fast-growing healthier beef category.

Were there any challenges in this process?

We have a very strong relationship and are focused on driving growth for Verde Farms. Of course, the entire industry was facing the pandemic at the beginning of our relationship. Despite this, Verde Farms has continued to grow and we continue to believe that there are very exciting opportunities ahead.

Read more about the deal in Iris’s questions and answers.

A midstream output

Black Bay Energy Capital has agreed to sell Piñon Middle Currenta gas company based in Houston, Enterprise Products for 950 million dollars.

Piñon was founded in 2020 through an initial equity investment from Black Bay Energy Capital with Steven Green And Justin Bennett. Piñon is a provider of processing equipment for the production of sour natural gas in the Delaware Basin. The deal is expected to close in the fourth quarter of 2024. Black Bay targets companies in the energy and chemicals sectors. The company currently manages assets valued at over $500 million.

“Black Bay has a history of working with talented entrepreneurs to build world-class companies like Piñon Midstream and also position them as strategic acquisition candidates for larger buyers looking for growth opportunities,” said Michael LeBourgeoismanaging partner of Black Bay, in a statement.

That’s it from me for today, if you have any questions, suggestions or want to chat, please email me at [email protected]

Michael Schoeck will be responsible for the show tomorrow.

Cheers,

Rafael