Live Deals: Oak Hill Takes Stake In Logistics Co. –

Marking the seventh transaction from its debut fund, Oak Hill Capital Partners has agreed to acquire a majority interest in GATX Logistics, a third-party logistics company and a subsidiary of publicly traded GATX Corp., for an undisclosed amount.

Oak Hill purchased a 57% interest in the company, while the Stephens Group, a holding company owned by investment banking firm Stephens Inc., purchased 23%, and GATX Corp. retained the remaining 19%.

Daniel Doctoroff, a managing partner at New York-based Oak Hill, said his firm is a strong believer in the outsourcing of logistics, especially when it comes to the movement of companies’ goods.

“It’s a rapidly growing trend among large and small companies to outsource their logistics,” Doctoroff said. “They’re figuring out that third parties can perform these necessary functions more effectively than they can alone.”

Founded in 1974 as a public warehousing company, GATX Logistics has since begun to manage a larger portion of its customers’ supply chains, from warehouse operations and private fleet transportation to product assembly and installation services.

Two additional aspects of this deal, aside from GATX Logistics’ overall purpose, attracted New York-based Oak Hill, Doctoroff said GATX Logistics’ e-fulfillment capabilities and the acquisition of GATX Corp.’s stake in Paxis, a company which consolidates and sorts packages and then distributes them into the U.S. Postal Service for delivery.

Doctoroff describes electronic procurement as a potentially “explosive trend” of which GATX Logistics is taking full advantage. GATX Logistics launched its e-fulfillment initiative last summer. It offers “back-end support” and fulfillment services for companies that sell products on the Web

As for Paxis, Doctoroff said it is somewhat of a start-up company, formed a year and one-half ago, that is going through a rapid growth curve that Oak Hill will continue to nurture.

Oak Hill anticipates growing all three of these business – outsourcing logistics, e-fulfillment and Paxis – through acquisitions, Doctoroff added.

Oak Hill Capital Partners was founded by private equity mogul Robert Bass in late 1998. The firm’s first fund closed on $1.55 billion last year and has since made investments that include the formation of MeriStar Investment Partners; the acquisition of a minority stake in American Skiing Co.; taking an interest in Cincinnati Bell, which is now Broadwing; the acquisition of Caribbean Restaurants Inc; as well as acquiring interests in newly formed Wide Open West Holdings and Financial Engines.