FdG Scores 5x Return With Footwear Co.

Mid-market firm FdG Associates pounded out a 5x cash return in selling Implus Footcare to AEA Investors after a seven-year ownership.

The New York-based firm sold the Morrisville, N.C.-based company after determining that the business still had room for growth but needed deeper pockets to take it there, said Doug Dossey, a managing director. FdG Associates bought a 100 percent interest in the company in 2001 through the firm’s $205 million first fund.

As part of the new deal, FdG Associates tapped its second fund, a $310 million vehicle, to take a minority stake in Implus Footcare alongside new majority owner AEA Investors. AEA Investors, also based in New York, specializes in consumer products, among other areas.

Dossey declined to say what the enterprise value of the deal was, although FdG Associates invested a little less than $20 million to recapitalize the company in 2001. The firm investigated selling Implus Footcare several times during its ownership but always decided to hold on to the company because it liked its growth prospects. Harbour Group, a St. Louis, Mo.-based buyout firm, actually got regulatory approval to acquire the company from FdG Associates in 2006, but the deal fell apart. Dossey declined to discuss specifics, but said FdG Associates decided not to do the deal. Representatives for Harbour Group could not be reached for comment.

While the company’s managers, led by Seth Richards, CEO, and Todd Vore, president, had a clear strategic plan to expand the company, FdG Associates helped facilitate Implus Footcare’s growth by helping it improve its human resources, IT and distribution technology, Dossey said. “One of the many things we did was just get out of their way and not try to micro-manage and be the smart guys form New York,” Dossey said.

The company, which designs, markets and distributes insoles, socks, shoelaces and other accessories, completed two acquisitions under FdG Associates’s ownership. It also shifted from getting its supplies from only domestic manufacturers to getting many of its products from China. Implus Footcare tripled its revenue and profitability during FdG Associates’s ownership, Dossey said.

Implus Footcare was one of the few remaining investments from FdG Capital Partners LP, closed in 1999. Since the beginning of 2007, the firm has made three investments from its follow-up fund, FdG Capital Partners II LP, a $310 million fund closed in 2005 that is now two-thirds invested.

FdG Associates invests in North American mid-market companies, typically committing $15 million to $50 million of equity in buyouts, recapitalizations, and growth-oriented investments. Sectors of interest include business and consumer services, distribution, light manufacturing, and retail and consumer products.—B.V.