Lakepointe Capital Partners, a new firm based in Minneapolis, cemented its first deal, acquiring Three D Industries, a manufacturer of concrete mixers, through a leveraged recapitalization.
Three D, based in Des Moines, Iowa, is solely devoted to manufacturing volumetric concrete mixers. Not the classic rear-drum mixers often seen spinning while on the road. Volumetric mixers store concrete’s individual components-sand, water, pebbles and cement mix-in separate bins, combining them only when the concrete is ready to be poured. Volumetric mixers currently comprise the smallest, but fastest growing segment, of the multi-billion dollar concrete delivery system market, Brett Casebolt, a Lakepointe general partner, told Buyouts.
The deal was financed with approximately one-third equity and two-thirds senior and mezzanine debt. Currently raising capital on a deal-by-deal basis, Casebolt said that the equity used for this transaction was institutionally backed, but he declined to name the investors. Per terms of the transaction, Lakepointe acquired significantly all of the assets of Three D and renamed the company Global Mixers.
Casebolt said that the volumetric mixer manufacturing space has been growing at about 20% per annum for the last five years.
“Being a fundless sponsor, it’s impossible for us to chase the fad industries and companies that are being marketed through intermediaries, so we generally will try to find things before they become fads in the larger markets,” Casebolt said, adding, “This [volumetric] style truck has gained a lot of interest across the industry in recent years.”
He said that Lakepointe was attracted to Global Mixers because volumetric mixers are the company’s sole product, whereas most companies in the U.S. that manufacture volumetrics do so more on the sidelines of their larger construction equipment businesses.
“This segment of the industry is in what’s referred to as the less-than-a-truckload’ market. So broadly speaking, these mixers are used for smaller jobs such as decks and patios and overall home renovations, where we see demand growing,” Casebolt said. He noted that a lot of people working for larger construction contractors have been breaking off and starting smaller operations, which is also feeding the market for volumetric mixers.
Lakepointe’s investment turf will generally be in the upper-Midwest, close to its base of operations. But the firm will search the entire nation for add-ons to fit its Global Mixers platform, Casebolt said.
No date has been set for when Lakepointe will start filling its first powder keg, but an institutional investment vehicle is on the firm’s mind.
“That’s the primary reason that we did this [transaction]-to ultimately raise a fund,” Casebolt said. “Rather than raising a small fund in today’s competitive market, we felt it was in our best interest to establish ourselves through a track record of a few investments in the lower middle market.”
Lakepointe seeks to invest in companies that earn at least $10 million in revenues. Aside from Casebolt, the firm’s deal pros include General Partner Todd Caven and Associate Patrick Gilbert.