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11/11/2011
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NOVEMBER 14 - 20, 2011
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
Huntington bolsters size PE firm gets feet wet with deal of corporate banking team MCM sees potential By MICHELLE PARK mpark@crain.com
Huntington Bank is gearing up to double its corporate banking team in Cleveland because it has seen its corporate lending grow and hopes to capitalize on big development projects here. Huntington recently made two additions to the team and plans to fill another eight high-level positions to bring its corporate banking staff to roughly 20, which, a spokesman noted, would be a new high. The corporate team handles loans and provides treasury management, capital markets and investment services to business clients with annual revenue of $15 million or more. Huntington has invested significantly in commercial banking across its regions, noted Jim Dunlap, regional and commercial banking director for Huntington, to whom 11 regions report, including Cleveland. The hiring in Cleveland is driven, in part, by corporate loan growth in recent linked quarters, said Dan Walsh, Cleveland region president. Though the Columbus-based bank does not disclose regional numbers, Mr. Dunlap said its corporate lending has grown footprint-wide for seven linked quarters. “I think that the Cleveland market seems a click or two ahead of what’s happening nationally,” Mr. Walsh said.
Huntington also is choosing to grow in Northeast Ohio because of current and planned infrastructure investments, Mr. Walsh said, citing the medical mart and casino in Cleveland. Opportunities exist to put capital into motion and to strike partnerships with companies involved in those investments, Mr. Dunlap said. “Cleveland is a very, very important market,” Mr. Dunlap said. “You have to be vibrant and vital in Cleveland to be relevant in Ohio.” The recent hires are Richard Pohle, who comes from KeyBank to be Huntington’s senior vice president, commercial region manager, and Karen Davies, who comes from PNC to be Huntington’s senior vice president, commercial team leader for the Cleveland region. The two bring a combined 46 years of experience in commercial and industrial lending. “The level of experience they have in the market has positioned us to take care of our more sophisticated corporate clients in the market,” Mr. Walsh said. As for the investment involved in doubling a corporate team, Mr. Dunlap noted that a lot of the new employees’ compensation is tied to variable components. “My bankers are highly incented to generate revenue streams that are sustainable,” he said. “They’re not as expensive as you would have historically thought.” ■
with majority stake in water treatment outfit By MICHELLE PARK mpark@crain.com
In what its executives call a rare move, MCM Capital Partners in Beachwood has become the majority owner of a company in its own backyard. Now, the private equity firm plans to double in five years the revenues of Zinkan Enterprises Inc., a specialty water treatment business in Twinsburg, said Harry B. Shimp, an MCM operating partner who now is CEO of Zinkan. MCM closed on its recapitalization of Zinkan on Oct. 31. Terms of the deal were not disclosed. Zinkan specializes in underground dust control and water treatment, said its founder, Jim Zinkan. Its newest division is water reclamation. MCM sees tremendous growth potential in water treatment, water reclamation and in the company’s production of chemicals used in hydraulic fracturing, said Mark Mansour, managing partner. Hydraulic fracturing, known as “fracking,” is a method of extracting oil and natural gas from deep shale formations. “It’s a market that we feel will grow faster than GDP (gross domestic
“I think this is going to be the most interesting ride.”
– Harry B. Shimp, operating partner, MCM Capital Partners product),” Mr. Mansour said of water treatment. “As water becomes a scarcer commodity, we think the company is very well-positioned to grow its business.” MCM had searched for a handful of years to invest in a water treatment business, Mr. Mansour said. This is the first such company on which it successfully bid. “I think this is going to be the most interesting ride,” said Mr. Shimp, who has led two other MCM Capital companies. “If you look at the opportunities from a macroeconomic basis in the world economy for the next 25 years, I think you’ll see two that are dominant: energy and water. And we’re in water. That’s one thing that really excites me.”
Fighting giants Work in water reclamation is one reason Zinkan sought a recapitalization for the first time since its founding in 1982, Mr. Zinkan said. A lack of depth in management is another, Mr. Zinkan added, noting that he turns 73 in December. “These are big jobs,” he said of water reclamation work. “It takes a lot more resources to take that market segment on because you’re competing against giants.”
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Zinkan, which operates distribution centers throughout the United States plus a Beijing office, employs about 50 people and has annual revenue nearly $30 million. It hired an additional four people in the field in the past couple months and plans to hire another four by the first quarter of 2012. Zinkan’s growth has been strong and consistent, said Mr. Zinkan, who now is chairman of a new fiveperson board being formed. Mr. Shimp anticipates Zinkan will continue to grow for a number of reasons, among them the drive to reduce the level of particulate in mines, which requires dust control. In addition, the Chinese are becoming more interested in the health and safety of their coal mine workers, he said, and opportunity exists for Zinkan in the fracking boom, both in providing ingredients for drilling and treating fracking wastewater. Mr. Zinkan and his son, Brian, the company’s chief financial officer, remain substantial minority owners, though their specific stakes were not disclosed. “With MCM Capital, the philosophy they have and the philosophy I have paralleled,” Mr. Zinkan said. “They like to see something grow … to let it grow.” On average, MCM holds companies for more than six years, Mr. Shimp said. Its recapitalization of Zinkan wasn’t financed by an official MCM fund, but by a group of MCM investors. ■