Altus exits bridge parts manufacturer for $96 M
PEI Infrastructure Investor
The mid-market private equity firm had expected infrastructure stimulus dollars would boost its investment in D.S. Brown but in the end it saw ‘very little benefit’ from the stimulus. Still, revenues rose 35% over its investment period.
by Cezary Podkul
April 8, 2011
Altus Capital Partners has exited its investment in a manufacturer of specialty components for bridges, highways and airfield pavement structures for $96 million, according to a senior executive at the mid-market private equity firm.
Altus acquired Ohio-based D.S. Brown in September 2008, just before the collapse of Lehman Brothers, the ensuing market crisis and $787 billion stimulus bill passed by Congress in February 2009 to stave off economic collapse. Included in the bill was about $48 billion of stimulus dollars for transportation infrastructure, including road and bridge repairs. Altus exited the business last week, illustrating the stimulus’ impact on owners of infrastructure-related businesses.
Altus co-founder Russ Greenberg told Infrastructure Investor shortly after the acquisition that the firm was “excited” about the stimulus, as it could lead to a lot more business for D.S. Brown. But looking back on the firm’s 2.5-year ownership of D.S. Brown, “there was very little benefit” from the stimulus, Russ’s brother and Altus co-founder Greg Greenberg said in an interview.
“The stimulus dollars that were put out there, those primarily went to basic patch and repair of asphalt and roads in North America, not to structural considerations,” Greenberg said. The components manufactured by D.S. Brown are more geared toward repairs on structures like New York’s Manhattan Bridge the New Jersey Turnpike Authority’s Newark Bay Bridge, two recent clients.
Still, by the time it exited the business on 1 April to New York-based manufacturer Gibraltar Industries for $96 million, Altus was able to achieve a 35 percent revenue uplift and 133 percent increase in earnings before interest, tax, depreciation and amortisation, according to Greenberg. D.S. Brown reported sales of approximately $65 million for calendar year 2010, according to Gibraltar.
Greenberg credited the increase to management initiatives such as increasing capacity, making the manufacturing process more efficient and broadening of the company’s product offering. Greenberg said Altus is now actively seeking similar deals.
“We focus very much on the manufacturers of products that go into infrastructure-related spaces,” he said, pointing to another portfolio company, Tennessee-based Aqua-Chem, which manufactures water purification systems for desalinisation plants.
Connecticut – and Illinois-based Altus Capital Partners invests in domestic US manufacturing companies, focusing on enterprise values between $30 million and $100 million, according to its website.