ICV Capital Digs Into Sterling Foods –

New York-based ICV Capital Partners LLC recently kicked off its first investment out of its newly raised $130.5 million fund, ICV Partners LP. The firm purchased an 88% stake in Sterling Foods Inc., a producer of shelf-stable bakery products, for $35 million.

The deal, which closed in September, was financed with $15.1 million in equity from ICV’s debut fund and a $21 million senior credit facility from Heller Financial. Heller provided $18.5 million of that funding at the close. BMO Nesbitt Burns advised Sterling Foods in the transaction.

Sterling Foods develops and produces bakery products such as cookies and cakes that have an extended shelf-life of up to three years instead of the normal four to five days. A large part of the company’s business is derived from sales to the military, giving it a strong position in the current war-influenced environment. The company also provides for the commercial market. “The commercial side is a much smaller piece of the business,” said Willie Woods, a managing director with ICV. “The military side will more than compensate for any offset that may occur in the commercial business, even though I expect the impact on the commercial side to be very little.”

Out of a situation that Woods described as “unfortunate,” the firm will actually see a good deal of growth throughout the current military action against terrorism. At present, Sterling Foods is providing its products to the troops in Afghanistan and approximately three or four of its products are included in each humanitarian food drop to refugees in that area.

Sterling Foods recently took part in a government initiative aimed at improving the appeal of food products among the troops. As a result, Sterling Foods co-brands products with nationally-recognized brands such as Hershey’s, M&M, Ocean Spray, Reese’s Pieces, and Sunkist.

“Our plans are to continue to dominate what we think is a very good business – the military business – and to substantially grow the commercial business,” said Woods. “We think there are a lot of opportunities in the commercial area to develop products.”

Majorities for Minorities

ICV Capital Partners was developed with a relatively unique focus on investments in companies that are operated by ethnic minorities, active in inner city communities or that hire from within inner city communities. Sterling Foods, which has more than 150 workers, is made up of 85% ethnic minorities and is proactively recruiting from low- to moderate-income communities in San Antonio, where it is based.

ICV Capital, which is 51% owned by ethnic minorities, seeks to make investments of $5 million to $30 million of equity into companies with revenues between $20 million and $150 million. Its industry focus includes business services, consumer products and services, food processing, healthcare, industrial manufacturers and media.