Celerity Tests the Waters

Some private equity investors may see a glass of water as half empty; some may see it as half full. Celerity Partners views a glass of water as a potion for good returns.

The private equity firm recently made a venture investment in O Premium Waters, a provider of bottled drinking water for residential and business customers.

The Los Angeles and Menlo Park, Calif.-based firm invested $4 million in a Series A financing and received a minority stake in the Mesa, Ariz.-based company. Six firms offered to invest in O Waters through either an equity investment or subordinated debt transaction. It was the first outside funding the company has received.

Celerity partner Paul Behrman has joined the company’s board of directors. He says that the company has been able to grow thanks to its membership marketing strategy, which provides unlimited bottled water through 36-month service contracts. The company’s competitors mostly provide bottled water on a cost-per-bottle basis.

CEO Frank Leonesio founded O Premium Waters in 2001 and remains the majority owner of the company. He plans to use the capital to expand O Premium’s plant and make it the largest single home and office water delivery producer nationwide.

Most of the capital will go towards sales and marketing. Leonesio plans to expand to satellite offices later on, with company growth focused on the Southwestern United States.

“In all likelihood there will be future financing requirements in a year or two,” says Behrman, who adds that he is looking for O Waters to become the largest provider in Arizona for bottled water services by the end of the year.

Leonesio has spent the greater part of his career developing and selling fitness clubs. He sold his last fitness club business, Q Fitness Training Centers to, Fitness Holdings Worldwide in 1999.

“In the companies that I’ve built there’s generally been subsequent rounds of financing for all of the investors,” says Leonesio. “We always seem to find growth opportunities.”

Celerity, which manages about $200 million in capital, invests in buyouts and other equity deals.