First Atlantic Grabs Prestolite –

First Atlantic Capital agreed to acquire Prestolite Electric Holding, a manufacturer of starter motors and alternators, buying the business from Genstar Capital. The transaction is expected to close in April.

Terms of the deal were not disclosed, although published reports have pegged the purchase price to be approximately $180 million. The deal will be financed with a senior debt package totaling $60 million from National City Corp. and a $30 million mezzanine tranche from Blackstone Group. First Atlantic is expected to be joined in the investment by select co-investors, although the firm will not comment specifically on who those will be until the deal’s close.

Prestolite, with operations in the United States, the U.K., Argentina and China, primarily manufactures products for larger vehicles including trucks, buses, emergency and off-road vehicles. In citing a draw to the deal, Roberto Bauron, chairman and chief executive of First Atlantic, said that Prestolite is not overly exposed to either the OEM or the after-market spaces. “Roughly half of its sales are from the OEMs and half are from the after-market,” he said. “Overall the business is not that sensitive to the industry cycles.”

Further, Bauron said, “Prestolite is very specialized in heavy duty and recreation vehicles and in each niche they are either No. 1 or No. 2. Plus, this is already a global company, with about 60% domestic sales and 40% international sales.”

Looking ahead, Bauron believes that with growth, Prestolite will be a candidate for either the public markets or a sale to a strategic, and to expand the business, First Atlantic will rely on both organic growth and acquisitions.

“This deal is a perfect fit with our strategy. There are a number of opportunities for acquisitions-some of which we’re already working on-and we also see some areas where we can institute some cost reduction… We expect this company to be much bigger in five years, and an IPO is a possibility, or we could also be looking at either a strategic sale or a financial sale,” Bauron said.

For the transaction, First Atlantic used its Atlantic Equity Partners III fund, a $350 million vehicle with a $50 million co-investment facility that invests alongside it. The fund is roughly two-thirds invested at this point, and sources have indicated that the firm will be looking to raise a new fund probably later this year. The new fund will likely be at or near $400 million. Other investments out of Fund III include Golfsmith and Ranpak.

Genstar Capital, meanwhile, originally acquired Prestolite out of bankruptcy protection, paying $40 million in cash plus the assumption of debt for the business in 1991.