Thayer Platform Adds On –

Despite its stifled attempt to raise a $1 billion fund (see Buyouts, 8/11/2003), Thayer Capital Partners has inked its first deal in 2003, through what Thayer Managing Partner Dan Dickinson called a “significant, first-time investment in MISTRAS Holdings Group.” On Sept. 8, MISTRAS purchased CONAM Inspection, which performs testing on manufacturing plant operations. Terms were undisclosed.

Thayer used its $880 million Fund IV for the deal. Dickerson said it was financed in part by senior and mezzanine debt. (Recently, Thayer halted its fund raising efforts on its fifth vehicle, originally targeted at $1 billion, shuttering the money-raising doors at the $300 million plateau.)

“MISTRAS needed capital, and we were their first call,” said Dickinson, who added that the deal was a long time in the making. “They meet our criteria for what we think makes a successful target in the industrial testing sector.”

MISTRAS tests its clients’ manufacturing equipment through acoustic, ultrasonic and vibration analysis to identify fatigue or defects in plant machinery and equipment. The Princeton Junction, N.J.-based company plays in what Dickinson said is a $100 billion industry. Thayer plans to grow the company organically and through add-on acquisitions.

According to Thayer, constrained capital spending is encouraging companies to extend the useful life and functionality of existing assets, increasing demand for nondestructive testing (NDT) technology. The need to avoid costly downtime in manufacturing encourages use of NDT technology to inspect operations without shutdowns and predict mechanical and other failures before they occur. More stringent regulations and a heightened public concern for safety have led to more thorough and frequent inspections, particularly in transportation and infrastructure.

Competition for manufacturers to maintain extraordinarily high quality standards, tight tolerances and low variability continues to fuel demand for NDT technology, according to Thayer.

Thayer’s Fund IV is roughly 75% to 80% invested to date, and prior to the MISTRAS deal, last made an acquisition near the end of 2002, buying Sunburst Technology from Houghton Mifflin. The Washington-based shop also made news this summer with the appointment of Scott Rued as a managing partner and Dick Snell and Jim Forese as senior advisors. In conjunction with those moves, Rick Rickertsen, once the firm’s COO and managing partner, has also stepped into the role of senior advisor.

Recently, published reports stated that Thayer is in late-stage talks with U.K.-based AllService Systems PLC to exit Aegis Communications, a call center with access to the financial information of millions of U.S. citizens. Published reports place Dinesh Dalmia at the head of the AllService table. Since the India-based businessman already owns a slew of call centers operating in his native land, Irving, Texas-based Aegis could be relocated overseas. Thayer lists former Secretary of Defense William Cohen, D.C. powerhouse lawyer Vernon Jordan and former U.S. Representative Jack Kemp on its board of advisors.