Waud Exits Chemicals Through Sale to AEA –

Waud Capital Partners LLC last month exited from its investment in Sovereign Specialty Chemicals Inc., selling a majority of its stake in the industrial sealant maker to private equity veteran AEA Investors Inc..

The Lake Forest, Ill.-based firm sold 75% of Sovereign to AEA. The remaining 25% will continue to be owned by Waud Capital and other institutional and individual investors, including management. Terms of the deal were not disclosed.

Waud Capital’s founder Reeve Waud said AEA was attracted to Sovereign because it had previous experience investing in specialty chemicals businesses. “They wanted to take it to the next level,” Waud said.

Sovereign manufactures and markets adhesives, sealants and coatings for industrial and consumer applications. The Chicago-based company was founded in 1996 by Sovereign Specialty Chemicals, L.P., a venture that included Waud and investor Robert Covalt, former president of Morton International’s specialty chemicals group.

Waud said Sovereign was started with Covalt as its chief executive. Covalt, who will stay on with Sovereign, had increased Morton’s specialty chemical division through 12 acquisitions, bringing the company’s annual revenue to $1.3 billion, Waud said. Under Covalt’s management Sovereign’s revenues have grown to $250 million annually by internal growth and six acquisitions over three years.

In April of this year, Waud Capital held a final closing on the firm’s debut buyout fund, Waud Capital Partners, L.P., after rounding up a total of $100 million.

The fund has since grown to $115 million, with additional commitments from the five members of the firm.