Target: Becker Underwood Inc.
Price: $1.02 billion
Seller: Norwest Equity Partners
Financial Adviser: Seller: Greenhill & Co.
Becker Underwood develops products for the agricultural sector aimed at helping seeds improve crop yields while decreasing carbon footprint and other waste. Norwest Equity bought the company in 2004 for an undisclosed amount and invested heavily in research and development while helping the company complete eight acquisitions, Partner Tim DeVries told Buyouts. Revenue at the company quadrupled, according to the firm, with Becker posting $246 million in revenue for the year ended Sept. 30, suggesting the company was generating around $61.5 million back in 2004.
Based in Ames, Iowa, Becker Underwood sells its products into more than 70 countries from locations in nine countries, according to Norwest Equity.
“The business is at an inflection point where I think somebody with very broad access to other markets … with a lot of resources can accelerate the growth of Becker Underworld to a whole other level,” DeVries said, when asked why the firm sold the company. DeVries declined to say the firm’s return but said there were “a lot of happy smiles” around the Norwest Equity’s Minneapolis office.
The exit comes weeks after Norwest Equity and co-investors sold WNA Inc., a manufacturer of disposable plates and cutlery, to Olympus Partners.
Meanwhile, Norwest Equity has invested about half of its ninth and most recent fund and would expect to raise another fund in late 2013 or early 2014, DeVries told Buyouts.
The firm raised $1.2 billion from Wells Fargo & Co., its sole investor, for Norwest Equity Partners IX LP in 2008. This year alone, the firm has invested $300 million from the fund in five new platform companies, including Savage Sports Corp., a Westfield, Mass.-based manufacturer of rifles and other equipment for the hunting and shooting sports markets; and Stanton Carpet Corp., a Syosset, N.Y.-based designer and manufacturer of carpets.
DeVries said he was not sure how large a fund the firm would like to raise.
It’s unclear how Norwest Equity would raise another Wells Fargo-sponsored fund, given that the Volcker Rule provision of the 2010 Dodd-Frank financial reform largely restricts banks from doing so. That said, the rule has yet to take effect, with regulators reportedly pushing back completion of the rule till the first quarter of 2013; after that, banks will have at least two years to comply with it once it does take effect, and they can apply for extensions, as Buyouts previously reported. DeVries declined to discuss the issue at length, saying only that he expects the firm will continue in its relationship with the bank.
Norwest Equity, which manages almost $5 billion, typically invests $30 million to $150 million of equity in transactions of $50 million to $500 million. Sectors of interest include agriculture, business services and industrials, among others.