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Small Conn. Shop Generates Large Return

Target: Davis-Standard

Price: $189 million

Sponsor: ONCAP (Onex Corp.)

Seller: Hamilton Robinson Capital Partners

Financial Adviser: Seller: The Blackstone Group

Hamilton Robinson Capital Partners LLC generated a healthy return in its sale of Davis-Standard, a company that makes machines that make plastic packaging, to ONCAP, a company owned by the publicly traded Canadian investment firm Onex Corp.

The Stamford, Conn.-based buyout firm sold the company to ONCAP for $189 million in a deal that closed Dec. 23, Scott Oakford, a partner with Hamilton Robinson, told Buyouts. The exit results in a return of 3.5x the firm’s investment, Oakford said. He declined to say what the firm’s initial investment in the company was.

Hamilton Robinson first bought a predecessor to Davis-Standard, called Black Clawson, in 2003. In 2005, it merged with Davis-Standard, and Hamilton Robinson controlled it in a joint venture with Chemtura Corp., the publicly traded specialty chemicals company that owned Davis-Standard. Chemtura cashed out in a 2006 recapitalization, leaving Hamilton Robinson as the sole majority owner under a new investment partnership.

Davis-Standard’s clients include major international companies such as DuPont, 3M Co. and Bemis Co. Inc. Since Hamilton Robinson’s investment in 2003, the company’s annual revenues have grown to more than $300 million from $30 million, according to the firm, due in part to the international expansion of many of its clients. The company also completed two add-on acquisitions under Hamilton Robinson. Based in Pawcatuck, Conn., Davis-Standard employs about 800.

“It’s very satisfactory in a number ways, and not just for ourselves,” Oakford said of the return. “It’s a powerhouse of a company now.”

The Blackstone Group was Davis-Standard’s financial adviser.

The investment came out of Hamilton Robinson’s second fund, a $75 million pool of capital closed in 2002. (The firm utilized a special purpose partnership with a number of co-investors for the 2006 recap). The fund has achieved a gross internal rate of return of 35 percent and an investment multiple of 3.2x, Oakford said. The firm is now investing from its third fund, which garnered $80 million in commitments in 2008.

Founded in 1984, Hamilton Robinson typically invests in companies with revenues of $25 million to $200 million and EBITDA of at least $3 million with three characteristics: a recognizable brand, technical products or services, and an international scope. It is primarily interested in companies in the manufacturing, distribution and service industries.