- Why this is important: Canada FO Tricor Pacific wraps debut deal in scalable niche: industrial welding for repair and maintenance
Tricor Pacific Capital wrapped up the inaugural deal of its new diversified investments strategy, acquiring a provider of maintenance welding solutions.
The Canadian family office bought Rockmount Research & Alloy, a Vancouver, Washington, maker and distributor of branded consumable industrial welding-alloy tools and accessories.
Terms weren’t disclosed for the deal, which was finalized in March. The seller was the Foster family, including former CEO Chuck Foster, who founded Rockmount in 1972.
Foster will stay on as a senior adviser. His son, Charles Foster Jr, will continue as a member of the management team.
Tricor Principals Chuck Cosman and Mark Townsend told Buyouts Rockmount is attractive because of its hard-to-replicate position in North America’s niche maintenance and repair welding space.
“We saw a very capable business that is very scalable and only needs additional capital and professional resources to expand further,” Townsend said.
Rockmount has 14 product lines and distributes roughly 55 welding-related products, primarily to machine shops inside businesses in the agriculture, construction and engineering, energy, and metals and mining sectors.
Tricor also proved a draw for Rockmount, Townsend said, because of its ability to hold assets indefinitely, which is expected to help protect the founder’s legacy.
Tricor, a longtime PE brand that returned to the market in 2018 as a family office, unveiled the diversified strategy last October.
It focuses on control acquisitions of mid-market companies in light manufacturing, business and consumer services, and specialty retail. Target opportunities with Ebitda of $2 million to $6 million, mostly based in Western Canada and the U.S., will typically involve successions, MBOs or recaps.
Rockmount was the first of 15 to 20 companies vetted by Cosman and Townsend. For the foreseeable future, the pair will lead the company, respectively as CEO and executive chair.
Tricor’s plan for Rockmount is to “augment its brand and niche activity” by pursuing organic growth and undertaking select acquisitions, Cosman said.
A key initiative will be increasing the company’s geographic footprint. With 95 percent of Rockmount’s sales currently U.S.-based, Cosman and Townsend view Canada as an important cross-border opportunity.
The global welding consumables market was worth $13.9 billion in 2018, Research and Markets reported last month. It is forecast to hit $19.2 billion by 2024, expanding at a compound annual growth rate of about 6 percent.
The second deal of Tricor’s diversified strategy is likely to be done later this year or in 2020, Cosman and Townsend said.
The diversified strategy relies heavily on the domain experience of Tricor during its tenure as a PE firm. Managing Partner Rod Senft, who co-founded the former Tricor in 1996, today leads the family office and its investment decisions.
Cosman joined Tricor last year from Canadian athletic apparel maker Lululemon, where he served in a number of management roles.
Townsend also joined in 2018. He was previously a vice president with Founders Group of Food Cos, Tricor’s food investment platform.
Tricor’s varied interests
While Tricor’s diversified strategy is a key focus, the family office also invests in a range of other sectors.
They include specialty protein, gifted confections and prepared foods, which is the purview of Founders Group. Since 2015, the platform has acquired 10 North American companies.
Tricor also has a stake in Premium Brands, a Vancouver, British Columbia, owner of specialty food businesses, which this week secured a C$200 million ($149 million) investment from Canada Pension Plan Investment Board.
In addition, Tricor invests in real estate and land-development projects, mostly on Canada’s west coast.