Celerity Partners last month completed a recapitalization of electrical contractor Constar International valued at roughly $70 million, said Mark Benham, founding partner at the California private equity firm.
In addition, the firm plans to raise a new fund-its third-of about $50 million in the first quarter of this year, Mr. Benham said.
The Constar deal is part of Celerity’s effort to consolidate the premises wiring and electrical contracting industry, Mr. Benham said, which he described as an “enormously fragmented area.” Constar will have revenue topping $65 million, he said.
About 50% of the recaptalization came in the form of senior financing, provided by First Dominion Capital. American Capital Strategies provided mezzanine financing, and the balance in equity was shared by Celerity and Constar management. If Constar performs well, management can earn additional equity and end up with a more-than-30% stake, Mr. Benham said.
Celerity’s equity capital came from the firm’s $40 million second fund. (BUYOUTS Jan. 12, 1998, p. 3). Limited partners include The Vector Fund, BT Alex. Brown, Dresdner Kleinwort Benson, GE Capital Corp., Credit Agricole and L.F.C. Acquisition Corp.
Mr. Benham said his firm prefers to focus on smaller deals because prices are better at the lower end of the market. He said the proliferation of mega-funds has had the effect of pulling capital out of the small-deal arena.