- Next flagship fund could kick off capital-raise next year
- Exits draw returns of more than 2x to more than 4x
- Firm pays 50 percent equity for two deals
The Porex Corp transaction comes as part of four exits with a combined enterprise value of about $3 billion. The deals mark a stepup in activity for the firm, which for the past five or six years has sold just one company per year. Aurora sold beverage carbonation firm NuCO2 and claims processing firm Mitchell Enterprises for about $1.1 billion each. It also sold ADCO Global, valued at about $360 million.
Kohlberg Kravis Roberts & Co bought Mitchell, while Arsenal Capital Partners purchased Adco Global; Praxair was the acquirer of NuCo2.
The multiple of invested capital Aurora realized on the deals ranged from more than 2x to more than 4x.
On the buyout front, the firm is paying about $330 million for the Insurance Solutions division of Zywave Inc, a specialist in insurance and financial planning software it is buying from Vista Equity Partners. It is paying another $350 million for a take-private deal it closed on Nov. 22 for National Technical Systems, a provider of testing and engineering services. Aurora Capital paid about 50 percent equity for both deals.
“This year we’ve been one of the most active middle-market firms,” Gerald Parsky, chairman of Aurora Capital Group, told Buyouts. “It’s a very strong market to sell good companies in. But you need to be very cautious about what you buy. We think we’ve selected two terrific companies. We’re not over-borrowing for either of them and we believe our governance program can help grow them significantly.”
The pair of acquisitions will bring the firm’s 2011 flagship fund, Aurora Equity Partners IV LP, to about 60 percent invested. That may set the stage for a fundraise in 2014 or 2015 for Aurora Equity Partners V LP.
“This is an environment, especially in the middle market, where you need to be quite careful,” Parsky said. “There’s a tremendous amount of attractively-priced debt and it’s driving the prices of assets up. We’ve been very careful with what we buy and we’ve turned down about 60 transactions.”
On the fundraising front, Aurora Capital continues to draw capital for Aurora Resurgence Management Partners II LLC, a distressed investing fund that’s gotten about $550 million in commitments thus far. The fund comes after its vintage 2007 Aurora Resurgence Management Partners LLC drew in $636 million.
Founded in 1992 by Parsky, Aurora Capital targets businesses with revenue of more than $100 million with checks ranging from $25 million to more than $100 million per deal. Sectors include aerospace and defense, energy, healthcare, industrial services, software, tech-enabled services, specialty manufacturing and distribution. Parsky’s resume includes a stint as assistant secretary in the U.S. Treasury during the presidential administration of Gerald Ford.
Aurora Equity Partners III LP, the vintage 2004 fund, rang up an IRR of 13.5 percent as of Dec. 31, 2012; Aurora Resurgence Fund’s IRR was 22.5 percent, according to data from the Oregon Public Employees Retirement Fund.