Miami-based Trivest Inc. is blowing more than just hot air with its latest investment in Aero Products International Inc., a maker of air-filled bedding products.
Trivest and management committed $30 million in equity to the deal. CIBC World Markets, along with a bank group of Banque National de Paris, LaSalle Bank, and Antares Capital Corp., led a senior credit facility in the amount of $58.5 million. Indosuez Capital financed the junior debt package, which was undisclosed.
Troy Templeton, a senior managing director at Trivest, said the firm was first introduced to the company early this year via a friend of the family that owns Aero Products and quickly became smitten by the company’s market share as well as its strong management team and profitability. “It is growing very rapidly and has averaged a 30% annual growth rate over the last three years, and we thought there was a tremendous opportunity to continue to build the company that was still early in its growth rate,” Templeton said.
Aero Products currently sells its products to retailers in the U.S. including Bed Bath & Beyond, Linen & Things, and more recently, KMart. Unlike most consumer products companies, however, Aero Products’ marketing reach also extends to many distribution channels, such as infomercials, where a large percentage of their sales come from, said Templeton. In addition, the company also sells its products to the home shopping network of QVC.
“We think there are some great opportunities to expand the number of retail outlets that are selling the product as well as growing the sales through the direct channel,” Templeton said.
In addition to air-filled beds, Wauconda, Ill.-based Aero Products manufactures air-filled pools, furniture and other leisure products. The company’s sales revenue is approximately $75 million.
On top of the many distribution lines that the company is trying to access, Aero Products is also trying to tap into the primary bedding market.
“About 20% of Aero Products’ customers buy its product as their primary bed and the primary bedding market is a $4.4 billion industry, which has been very recession-resistant,” Templeton said.
Trivest has been on a casual-furniture buying spree as of late with its most recent investment in Brown Jordan International Inc. for portfolio company WinsLoew Furniture Inc., a manufacturer and distributor of casual furniture for the residential and contract markets, seating products for the commercial and lodging markets, and promotional ready-to-assemble products for the mass merchant and catalog markets.
The Aero Products deal was funded by Trivest’s third fund, which is slated to close between $315 million and $320 million by the end of the summer, Templeton said. The private equity firm sent out offering memoranda for its third fund, which had an initial target of $400 million, in November 1999. “because of the tough fund-raising environment we were very pleased to have raised just 50% over our $210 million fund that we previously raised,” Templeton said. Deutsche Banc Alex.Brown is serving as the fund’s placement agent.