Nailite International Inc.'s new ownership has been decided.
Philadelphia-based investment firm Graham Partners Inc. acquired a controlling stake in the injection molder of siding panels, whose home base is Miami. Sun Capital Partners Inc., based in Boca Raton, Fla., will continue to own some equity, officials said. Detailed terms were not revealed in the deal, which closed April 14.
``[Sun Capital officials] like the business and they wanted to be partners with Graham,'' said Joe May, managing principal with Graham. ``We worked out a structure that allows them to maintain a continued ownership stake.''
Sun Capital Partners has owned Nailite since 1997. Officials had been shopping for a buyer since last year to get a return on investment.
``We think the company continues to have great potential and we think that Graham is an excellent equity sponsor. We've done well with our investment and expect to continue to do well,'' said Roger Krouse, co-founder and managing director of Sun Capital.
Graham Partners stated its intent to acquire middle-market, polymer-based firms in building and construction last month, when it nabbed HB&G Building Products Inc., based in Troy, Ala. That firm is a maker of specialty millwork.
``What we liked about Nailite and HB&G is the organic growth prospects,'' May said in an April 16 telephone interview. ``These businesses have the wind at their backs. They're growing at a faster rate than the overall market.''
The polypropylene siding category has experienced a compounded annual growth rate of 13 percent during the past two years, May said. The siding market overall has had about 3 percent growth during that same period. Nailite itself has experienced average growth of 21 percent each year during the past four years, generating $40 million in sales annually.
``Nailite is a leading producer of polypropylene siding,'' May said. ``As a category, we think that polypropylene siding is well-positioned to be taking some share from stone and brick, and other siding materials as well.''
Despite its focus on organic growth, Graham also expects to make acquisitions that fit with Nailite. Graham Partners manages a private equity fund with more than $227 million in invested capital.
American Capital Strategies Ltd., based in Bethesda, Md., invested $9.3 million of subordinated debt financing, according to a news release. Graham officials anticipate launching the firm's next fund with a target of $400 million later this year.
Howard Wasserman, Nailite's current president and chief executive officer, will stay with the company.
``We think he's a man that's fully capable of continuing to grow the business and he will be instrumental in helping us do that,'' May said.
Wasserman, reached by telephone April 16, said there are no surprises for Nailite's future. Although he does not anticipate any changes in direction, he said Nailite will be reviewing its plans with Graham.
``Our major thrust is to expand product lines, expand geographically and to help create demand for this type of product at the consumer level,'' he said. ``Those are the plans we have in place and we will continue those under the Graham stewardship.''
Nailite has had to make significant capital investments every year to keep up with its growth, he said, and officials have made the necessary investments for 2003. In 2001, the firm consolidated into one 104,000-square-foot facility in Miami.
In order to reach consumers, the firm began regional television advertisement in February. While its major material is PP, officials have investigated alternative combinations of materials.
``It would be extremely premature to say anything now,'' Wasserman said of any official use of alternative materials. ``We are doing work in that area.''