Max Morphs Into Altus, Raises Fund –

More than a year ago, when Max Capital’s founders decided to part ways, the game plan was to divest at least one portfolio company per year, until the five companies in which they held controlling stakes in were fully divested. While the partners are working to divest the remaining three companies left in the portfolio, the team made of Russell Greenberg, Elizabeth Burgess, Clifford Gookin, Gregory Greenberg and Alicia D’Anna have founded Altus Capital Partners Inc. (One member of Max Capital left the firm, which is what forced the name change from Max Capital to Altus.)

The new fund wasted no time raising its inaugural fund. Altus Capital Partners has already held a close on Altus Capital Partners SBIC Parents LP for $27.6 million. The firm is now applying for $55 million of capital from the Small Business Administration (SBA), and Russell Greenberg expects the fund’s final close to come in June with a total of $150 million. The fund will invest between $4 million and $10 million into each deal and should be fully invested in three to five years.

“Altus is ready to make investments. The firm was formed last year and we got the Small Business Investment Companies Program (SBIC) license in September,” said Greenberg, president of the new firm. “We held our first closing of $17 million in September, too, then got an additional $27.6 million in December. This fund is really no different than our Max Capital fund, except that we are getting capital from the SBA. We’re really quite pleased with where we are.”

Altus’ investment strategy is to acquire profitable, small-to middle-market manufacturing businesses, offering proprietary products with annual EBITDA between $5 million and $15 million. The firm will concentrate on businesses based in the Midwest and East Coast regions of the U.S. Altus is based in Westport, Conn., with offices in Lincolnshire, Ill., and Lexington, Ky.

The firm has not made any investments to date, but Greenberg said Altus is looking very seriously at some manufacturing deals. The firm’s investing expertise lies in buying family-owned businesses. “I think we’re good at it. We can empathize with them and we have been successful with family businesses in the past,” Greenberg said.

Other than the SBA, investors in Altus include LPs from the principals’ prior fund including: Bank One, Madison Capital Funding LLC, an affiliate of New York Life Investment Management Holdings LLC, and The Ohio University Foundation. The fund added new investors as well. It has a total of 27 institutional investors and high-net-worth individuals.

Before Altus

Max Capital gained controlling interests in the five companies through its $60 million first-and last-vehicle, Max Capital Partners Fund. The firm’s first exit was the sale of ESCO Holding Corp., a manufacturer of aircraft launching and arresting systems, for $62 million. According to Greenberg, ESCO achieved an IRR in excess of 53% and the sale returned 71% of invested capital from the Max Capital fund during three years under Max’s ownership.

The firm’s second divestiture was the sale of Quest Specialty Chemicals, a holding company formed to acquire Royal Adhesives from Uniroyal Technology Corp., in Nov. 2001. Royal is a manufacturer of industrial adhesives and sealants, commercial roofing adhesives and mirror mastics.

Greenberg, who served as chairman of Quest during his firm’s ownership, said the target grew 10% per year for the two years in the Max portfolio, and returned the firm nearly $11 million on a $4.7 million equity investment. While neither seller nor buyer disclosed the total purchase price, a source close to the deal said the sale was less than $50 million.

The three remaining controlling interests still in the Max Capital portfolio are: Duramax, a specialty rubber and vinyl flooring manufacturer, Continental Structural Plastics, a maker of structural plastic parts, and Calwax Corp., which makes paraffin waxes for a variety of consumer and industrial uses.