Conn. Shop May Soon Deliver Its First Exit – EXCLUSIVE

Target: Fleetgistics Holdings Inc.

Price: TBD

Seller: Atlantic Street Capital Management LLC

Sponsor: Harbour Group

Atlantic Street Capital Management, a lower mid-market investment firm, is poised to score its first exit with the sale of delivery services provider Fleetgistics Holdings Inc. The firm is in talks to sell the Orlando, Fla.-based courier company to Harbour Group, a St. Louis, Mo.-based buyout shop, according to a regulatory filing.

Fleetgistics has three divisions: Medifleet, which provides same-day delivery services to hospitals, laboratories and other medical-related institutions; Partsfleet, which delivers automotive parts and other supplies; and Scriptfleet, which provides delivery services for long-term care pharmacies.

It’s unclear how much of a return the Stamford, Conn.-based firm stands to make on the deal. Executives at both Atlantic Street Capital and Harbour Group declined to comment, and those at Fleetgistics did not respond to a request for comment by deadline.

The investment began for Atlantic Street Capital in June 2007, when the firm bought Ace Expediters, an Orlando-based courier company that later became Fleetgistics with the acquisitions of two other courier companies: Express Courier Systems Inc., a West Haven, Conn.-based company, in April 2008, and Network Express Inc., a Clearwater, Fla.-based company, in March 2009.

If the sale proceeds, it appears it will be the first exit for Atlantic Street Capital, according to both the firm’s Web site and CapitalIQ. Atlantic Street Capital has been investing from a $45 million pool of capital provided by Morgan Stanley Alternative Investment Partners. An exit could help the firm as it seeks to raise its second fund; Buyouts reported in June 2009 that the firm was getting ready to seek as much as $100 million for a follow-up vehicle. For Harbour Group, the investment would come out of its fifth fund, according to the regulatory filing. Harbour Group raised $505 million for that fund in 2006, according to Capital IQ.

Managing Partner Peter Shabecoff, a lawyer and former partner at Greenwich, Conn.-based mid-market buyout shop North Castle Partners, founded Atlantic Street Capital in June 2006. The firm invests in turnarounds, restructurings, businesses in bankruptcy and spin-offs with negative operating cash flow and customer concentration. It typically invests between $5 million and $15 million of equity in companies with revenues of $30 million to $250 million.

The firm has two other portfolio companies: Double B Foods, a DeSoto, Texas-based maker of meat snacks and frozen food it bought in 2006; and EZE Trucking Inc., a Rialto, Calif.-based company it bought in April 2009 that helps deliver cranes and other heavy products used in the infrastructure industry.