Firm: Gen Cap America
Fund: Southvest Fund VI
Amount Raised: $165 million
Small and steady is proving a successful approach for
The majority of investors in
“The basic thing we’re telling investors is that we’re going to keep doing what we’ve been doing,” he told Buyouts.
What Gen Cap America does is invest in what it considers good management teams—then lets them run the business. The firm targets companies with annual revenue of between $5 million and $100 million with a history of strong cash flow. Gen Cap America targets the manufacturing, distribution and basic services sectors, in keeping with its meat-and-potatoes style. Accordingly, the shop steers clear of technology and real estate, and also avoids turnarounds and start-up situations. The majority of the firm’s current portfolio companies are located in the Southeast United States, but the firm doesn’t have any mandated geographic preferences or limitations.
The recession hasn’t had a heavy impact on Gen Cap America so far, Napier said.
“To date the portfolio is holding up extremely well, and deal flow is good,” he said. “We’re seeing opportunities with owner-operators who are nervous about the economy and looking to cash out, and in corporate carve-outs, where the parent company needs liquidity.”
Another factor in the firm’s continued success is that leverage is a small part of the equation, lessening the impact of the credit crunch.
“We’re lucky if we borrow 2x to 2.5x on a senior basis,” Napier said. “But, since we’re doing small deals, we’re paying lower multiples. We make it a point to factor a downturn into our [the portfolio company’s] loan covenants.”
It’s been less than four years since Gen Cap America last raised a fund. The predecessor pool,
The firm’s portfolio companies include Advantage Nursing Services LLC, a New Orleans nurse staffing company; AmBath/ReBath LLC, a maker of bathtub liners and related products headquartered in Phoenix; Belt Power LLC, a Smyrna, Ga.-based conveyor belt company; Calling All Ships LLC, a Miami distributor of health and beauty products; and Van Pool Transportation LLC, a Wilbraham, Mass.-based provider of transportation services for children with special needs.