Fund Closes: Castle Harlan Closes Deal, Aussie Fund –

New York-based investment firm Castle Harlan is etching its place in the engraving industry with an investment in Gravograph Industrie International in the last week of April.

The firm also just held a first close on an Australian leveraged buyout fund targeted at AUS$500 million (BUYOUTS, November 8, 1999, p 32).

Castle Harlan acquired approximately 95% of Gravograph, the world’s largest manufacturer and distributor of engraving machines and materials, in a transaction valued at approximately $100 million from Castle Harlan Partners III. The deal was financed with an estimated 30% of equity and senior and mezzanine debt underwritten by Westdeutsche Landesbank. Fund III is just over 50% committed.

The former chief executive officer and chairman of Gravograph, Albert Journo will remain chairman, while former president and chief operating officer, Gerard Guyard, will be promoted to CEO.

Gravograph, whose main facilities are in Duluth, Georgia and Troyes, France, markets it products under the brand names New Hermes and Gravograph. The retail sector of its customer base, which accounts for about one-third of the business, includes jewelry stores like Tiffany’s, trophy shops, and other retail shops. The remaining two-thirds of the business focuses on institutional and industrial sectors, including the U.S. Army and Navy, schools, and various manufacturers.

“The company has been around for a long time,” said Robert Wages, director at Castle Harlan. “It’s brand name, New Hermes, has been around in the U.S. and is very well known by people in any sort of engraving area. So [it has] a very good market position, [and] a very good name historically in the U.S. and the other countries in which it sells its products.”

Wages led the negotiations alongside Castle Harlan managing director Marcel Fournier and associate Kimberly Foerster.

Castle Harlan plans to add products to Gravograph’s lines, including a laser engraver and other accessories, Wages said. There are also plans to more aggressively pursue Gravograph’s existing markets in Latin America and Asia. Most of the company’s sales are currently in North America and Europe. Last year Gravograph had revenues of $95 million.

The company will also be expanding its telemarketing operations in the U.S. and introducing Internet sales to their European market, said Wages.

G’day Investments

This month Castle Harlan also held its first close for Castle Harlan Australian Mezzanine Partners. The closing includes AUS$190 million from Castle Harlan and another AUS$220 million from their counterpart down under, Australian Mezzanine Investments Pty. Limited. Another close for U.S. investors is due in June. The target for the fund is AUS$500 million, with Castle Harlan expected to draw in a total of AUS$290 million.

The fund will focus primarily on leveraged buyouts in Australia and New Zealand, but has some capability to invest elsewhere in the Pacific Rim, Wages said. The joint venture management company, named Castle Harlan Australian Mezzanine Partners Pty. Limited (CHAMP), is based in Sydney.