New owners plan growth across US for medical molder Seaway

New owners of injection molder Seaway Plastics Engineering LLC expect to use the new company as a growth platform to expand across the United States.

Seaway, based in Port Richey, Fla., currently operates out of three locations in Florida and California, but private equity firm Intermediate Capital Group plc expects to change that through both internal growth and acquisitions.

Intentions are to increase business at Seaway by stretching both the company's geographic footprint as well as product offerings while staying true to a low-to-medium volume business strategy, according to Uzair Dossani, managing director of North American Direct Private Equity at ICG.

"Seaway really focuses on low-to-mid volume, high complexity, high customer service and our view is there are very few businesses in the U.S. that can do that well," Dossani said in an interview. "One of the things we were most impressed with Seaway was the quality of its customer base, really blue chip OEMs, particularly on the medical side and exceptionally high retention rates."

Seaway serves the medical device, health care, specialty industrial, aerospace and defense markets, the new owners said.

Dossani worked with Kevin Gregory, healthcare sector lead for North American Direct Private Equity at ICG, to put the deal together.

"The global medical device market is large, defensive, and growing. As device manufacturers seek high-quality outsourcing partners for complex production and related services, Seaway is particularly well-positioned to benefit," Gregory said in a statement.

Seaway's client list includes more than 400 customers and was founded in 1984. The company has a total of 130,000 square feet of space at three locations and more than 250 employees.

Sales are about $40 million per year, according to a source familiar with the private company's finances.

"The majority of the revenue is for medical device products, well more than 50 percent of the revenue is from the device side," Dossani said. "Their value proposition resonates particularly well with the medical end market. Medical end market is very demanding from a product quality standpoint. Very demanding from a service standpoint. The value-added services that Seaway can provide such as assembly, clean room manufacturing, clean room kitting, those are particularly important to medical customers. That's why you see the majority of the revenue come out of that end market."

"We think we will continue to grow across the board, but we'll continue to see the mix shift more toward medical because the growth is just faster there," he said. "Right now, low-to-mid volume is our core strength. We do think selectively moving to the upper part of the mid-volume market, maybe bumping up against the high-volume market [could happen]."

Seaway was earlier acquired by Tonka Bay Equity Partners in 2015. It was in 2020 that Seaway acquired Wright Engineered Plastics of Santa, Rosa, Calif., to expand beyond the company's two locations in Florida. Operations include 54 injection molding machines with clamping forces of up to 950 tons.

Seaway dates to 1973 when it was founded in Detroit by brothers Len and Jerry Bahalo. They later sold the firm to Plant Manager Paul Yellinick who eventually moved the company to Florida in 1986 with just a few injection molding machines.

Dossani pointed to the experience of the company's existing management as an important aspect of making the deal. Having that history in place, he said, will allow for management of future growth.

"The thesis is really predicated on growth. The business is growing quite nicely organically, so over time we'll certainly need to make investments to keep up with that organic growth. That will be investments in people, sales and service in particular, but also in production capacity at all of our facilities all of which have room for expansion," he said.

"But we do think acquisition growth makes a lot of sense here. The combination with Wright was quite powerful and provided broader geographic reach to the company," Dossani added.

Potential locations for expansion include Southern California, the Upper Midwest and the Southeast.

"We want to build out a broader geographic footprint to be able to serve a full national base of customers," he said.

"I think we'll follow our customers to some extent. So we don't need dots on the map everywhere. But customers like you to be close to them for the obvious reasons and particularly in an era of supply chain challenges," Dossani said.

Chicago-based Stout Investment Banking acted as sell-side adviser to Seaway. David Evatz, managing director, led the deal.