Brazos Makes First Exit To H.I.G. –

Brazos Private Equity Partners, through a sale to H.I.G. Capital, unloaded its Rennhack Marketing Services portfolio company, marking the first exit for Brazos’ inaugural fund. Terms of the deal were not disclosed.

Rennhack, based in Grapevine, Texas, provides marketing services primarily to the financial industry. The toasters, coolers and tool sets used to lure customers into banks are Rennhack’s specialty, but the company has expanded its list of clientele to include car-rental agencies, airlines and pharmaceutical companies.

Brazos first acquired the company in May 2002 with equity from its $450 million Brazos Equity Fund LP.

Brazos Partner Randall Fojtasek noted that during the investment, the firm focused on augmenting the management team-led by CEO James Gresham-and added former Pizza Hut President Mike Rawlings to the board and installed Greg Gullo as chief financial officer. Rawlings achieved marketing fame in 1999 with his decision to emblazon the Pizza Hut logo on an unmanned Proton rocket en route to the International Space Station, calling the ad in a statement, “One small step for mankind, but one giant leap for our Pizza Hut turnaround.”

Rennhack also benefited from the heated competition among the banks to win new customers, according to Fojtasek. While the bank industry’s consolidation may have represented a declining customer base to some, Fojtasek remarked, “It actually helped Rennhack, as these banks looked for more ways, outside of acquisitions, to attract new customers.” He added that Rennhack’s EBITDA and revenue grew at a “double-digit pace,” but would not be more specific about the company’s financial performance.

Through the investment, Brazos was able to realize an IRR of more than 100%, which includes proceeds generated from a 2002 recapitalization.

H.I.G. Capital, meanwhile, is expected to integrate Rennhack into its HALO Industries portfolio company. The Miami-based buyout shop acquired HALO, a promotional products company, out of bankruptcy last year in a deal valued at $22 million.

Snap Shot

Buyer: H.I.G. Capital

Target: Rennhack Marketing Services

Seller: Brazos Private Equity

Advisors: Brazos: Growth Capital Partners

Legal Counsel: Brazos: Gibson, Dunn & Crutcher