1. Weston Presidio has been particularly active on the exit front this year. Why is that?
By the end of this year we will have fully or partially realized 10 companies in the portfolio, through outright sales, dividends or leveraged recaps. In late 2008 and 2009 we were very focused on the portfolio, and we feel like those companies are very well positioned and we’re now beginning to realize on their performance.
2. How much have you returned to investors this year?
We’ll distribute in excess of $375 million in capital this year. As it relates to Fund V, we’re going to distribute somewhere in the neighborhood of 40 percent of the invested capital. We believe that’s pretty remarkable for that vintage year (2005). For the last couple of years, there hasn’t been much in the way of distributions in general from private equity, so we’re pretty proud of this number.
3. What was Weston Presidio’s stake in Associated Materials, which Hellman & Friedman LLC recently agreed to buy for $1.3 billion, and what was the firm’s return?
I’m not at liberty to say, but we joined with another private equity firm and one of our limited partners and purchased that business along with the management team in 2002. They were able to execute on their strategy and deliver the fifth year of their five-year plan within the first two years. In 2004 we recapped the business with a new private equity firm and retained a small interest, which was just sold in this recent transaction. The total return was certainly north of 3x our capital.
4. It looks like Weston Presidio only has one new investment since 2008, RE/MAX International Inc. in June.
With all of the events that occurred in the fall of 2008, we decided to pull back from making new investments and focus on the portfolio. During that time we invested $120 million between supporting the growth and addressing the challenges of portfolio companies. It was only in the late part of 2009 and early 2010 that we felt comfortable about assessing business plans and having some sense of comfort about what we were seeing.
5. Weston Presidio has a history of focusing on retail, consumer and industrial companies. Where are you seeing the most opportunities today?
Because of our position in the consumer-retail area, we see many if not all retail and consumer investments. It really was the franchise of this firm. We have been having a great deal of difficulty finding opportunities there today. It’s really the uncertainty about the consumer spend, which translates into less clarity about the growth plans, uninspiring recent performance generally in many of the businesses that we’ve seen, and also valuation expectations have really created challenges for us in that segment. Where we’re seeing the most activity is in business services. It’s easier to look at those businesses and see stability for their performance, and the outlook for growth is still strong because we continue to believe that corporations here and around the world will continue to outsource a number of the services they had in the past provided for themselves.
Edited for clarity