Teachers Scans IDS Graveyard For Deals –

Teachers’ Private Capital, the private equity arm of the Ontario Teachers’ Pension Plan, has clinched its first autonomous deal in the U.S. with the acquisition of Alliance Laundry Holdings, LLC. Alliance, a portfolio company of Bain Capital and Bruckmann, Rosser, Sherrill & Co., had tried to go public via an IPO of income deposit securities, but the IPO never did materialize and Bain ultimately decided to pursue a sale instead. The transaction, valued at $450 million, is expected to close next month.

“Once somebody files a public offering, it raises flags that they’re a seller,” Teachers’ Senior Vice President James Leech told Buyouts. “But more important, by early fall you could tell that the IDS market wasn’t going to take off like it has in Canada at least not yet. So we said, Okay, there might be some jewels in there.'”

In 2002, Bain had initially looked to float Alliance as an income trust in Canada, the same market that served as the predecessor to the IDS in the U.S. However, tax issues quashed that idea. When the IDS market started making some noise in the U.S. earlier this year, the investors again looked to float the company. But like most IDS filings, the Alliance floatation never got off the ground, leading Bain and Bruckmann, Rosser, Sherrill to seek out another route, and Teachers’ was able to position itself to pick up the pieces. Possibly helping Teachers’ cause, the firm has invested alongside Bain in the past, including investments in Shoppers’ Drug Mart and Samsonite.

The sellers did not go through a formal auction in the sale of Alliance, although Code Hennessy & Simmons, Onex Corp. and Willis Stein & Partners were rumored to have expressed interest in the business.

Heavy High Growth?

While this is the first U.S. transaction for Teachers’ on its own, the pension plan has invested in the U.S. before.

Leech said Teachers’ was drawn to Alliance’s dominant market share in the commercial laundry space, and he expects future growth to come from Alliance’s re-entry into the consumer market. “Management really sees a lot of growth going forward. The company sold off its consumer product division a number of years ago, and their non-compete agreement expired recently, which opens up a lot of potential,” Leech stated. “We anticipate that Alliance will target the residential market, and in doing so, will go after the very high end consumer.”

Additionally, Leech added that there could be some add-on acquisitions for the company, although that plan is not necessarily built into Teachers’ model.

Lehman Brothers served as the advisor to the sellers and has also been tapped to arrange a debt package for Teachers’ as well.

Meanwhile, through the sale, both Bain and Bruckmann, Rosser, Sherrill & Co. will book a return of more than 230%, according to reports. In 1998, Bain led the acquisition of Alliance, acquiring the company in a $375.6 million LBO from Raytheon Co., which held onto a minority stake in the business.