Norwest Builds Up Portfolio Companies –

Norwest Equity Partners is busy shoring up its portfolio companies. The Minneapolis, Minn.-based private equity firm recently acquired its fifth add-on acquisition for Paladin, a supplier of construction equipment attachments that the firm acquired about two-and-a-half years ago. No financial terms of the transaction were disclosed other than that Antares Capital Corp. led the deal’s senior debt financing while National City Equity Partners and Norwest Mezzanine Partners led the subordinated financing.

Construction equipment attachments are seen almost everywhere. They are the backhoes, trenchers and loader buckets often seen attached to hulking construction and forestry equipment. Prior to this latest add-on, just about all of Paladin’s product line was geared toward earth moving, construction and demolition. But Paladin’s latest addendum, Sweepster LLC, will lend a helping hand to clean up the messes made by some of its other products.

Dexter, Mich.-based Sweepster is a manufacturer and distributor of branded rotary power sweepers for the light and heavy construction equipment markets, which are sold and distributed to original equipment manufacturers through a national network of independent dealers. Sweepster also produces self-propelled products that are used in the aviation and municipal markets including 18-foot wide all-wheel-drive sweepers that are used to clear debris form airport runways as well as smaller versions to clean city streets and sidewalks.

“Paladin is trying to be one face to all its customers, which is a strategy that has become a trend in the construction equipment industry,” Timothy Kuehl, a principal at Norwest, told Buyouts.

Kuehl said there are 20 major product lines associated with construction equipment attachments and Norwest’s goal for Paladin is to identify and acquire the companies that best represent those segments and create a one-stop-shop for companies in the commercial construction, demolition, landscaping and forestry markets.

Norwest will reach its goal when Cedar Rapids, Iowa-based Paladin becomes the industry’s largest independent manufacturer of full-line attachment products, which, according to Kuehl, might not be too far off. “I’d say we are the market leader in about 15 [of the 20] segments, which makes us one of the largest, if not the largest, companies in our space,” Kuehl said.

Norwest had been trying to buy Sweepster since the summer of 2003, which is when the firm began working on the Paladin investment, Kuehl said. All negotiations with Sweepster were exclusive and no intermediary was used to broker the deal.

Equity for the transaction, and all other Paladin investments, came form Norwest Equity Partners VII LP, which closed in 1999 with an $800 million commitment from Wells Fargo & Co., Norwest’s sole limited partner. Last September, the firm closed Norwest Equity Partners VIII LP; also an $800 million investment vehicle funded entirely by Wells Fargo.

In other Norwest news, one day before finishing the Sweepster deal, the firm completed the recapitalization of another portfolio company, Imperial Supplies Inc. Through distribution centers in Green Bay, Wis.; Charlotte, N.C.; Dallas, Texas and Reno, Nev., Imperial supplies maintenance products such as cutting tools, rivet guns, hoses and related chemicals to fleet industries. Proceeds from the recap will be used to provide a dividend for the company’s shareholders as well as to fund its future organic growth initiatives.

In addition to an undisclosed amount of debt, Norwest originally invested about $30 million of equity in Imperial in April 2003 to acquire an 80% stake in the company. Post recap, Norwest maintains the same holdings in the Green Bay, Wis.-based distributor, Stephan Soderling, an associate at Norwest said.