Page 6 • Thursday, August 23, 2018
Jacksonville Daily Record/Jacksonville Record & Observer
Private: Firms seeking growth backed with billions to invest CONTINUED FROM PAGE 1
“Private equity is multiple times the public companies,” said Don Wiggins, president of Heritage Capital Group in Jacksonville. A midyear report by PricewaterhouseCoopers said there are nearly 8,000 private equity-backed U.S. companies, doubling the fewer than 4,000 firms traded on the major stock exchanges. Private equity-backed companies include some of Jacksonville’s largest corporations, like Southeastern Grocers LLC, (operator of the Winn-Dixie supermarket chain), and sales and marketing firm Acosta. These businesses are backed by major investment firms with billions of dollars to spend. However, most of the businesses are smaller and funded with different levels of investors. New businesses may be backed by so-called angel investors. “For angel investors, it’s primarily local,” said Wiggins. “It’s kind of a friends and family situation.” Other startup businesses are funded by venture capital firms, “companies that have been formed to invest in early stage companies,” Wiggins said. Jim Stallings, CEO of PS27 Ventures in Jacksonville, has helped fund a number of small businesses in the area with venture capital. Stallings said there aren’t a lot of companies in Jacksonville like his that would describe themselves as venture capital firms, but he is seeing more investor interest in funding new companies. “The angel network is getting more organized in Jacksonville,” he said, with potential investors joining clubs to identify potential targets. Many of the investors are retired executives with money available and years of expertise to offer a startup, Stallings said. “There’s millions of dollars of capital that comes in through that network,” he said. But it’s not easy. Stallings said investors shouldn’t provide funds they can’t afford to lose. “This is risk capital. They all know it,” he said. Big money private equity firms search for companies that already have a strong revenue stream but have room for more profitability, Wiggins said. “In real estate it’s location, location, location. For private equity it’s grow, grow, grow,” he said. Employees may fear job cuts as big investors come in, but Wiggins said his experience with corporate buyouts shows it doesn’t usually happen that way. “They never come in and slash and burn,” he said. “They want to accelerate the growth. They want to make it more profitable.”
Photo by Karen Brune Mathis
Jim Stallings, CEO of PS27 Ventures, said he sees more interest from investors to fund new companies,
AREA PRIVATE EQUITY-BACKED COMPANIES The Jacksonville area is home to about 150 companies backed by private equity interests. Many of them are small companies not followed closely, but the list includes several prominent Jacksonville companies.
Interline Brands Interline Brands, which markets and distributes maintenance, repair and operations products, is owned by publicly traded Home Depot Inc. But over the years, it has gone back and forth between public and private ownership. The company opened in the 1950s under the name Barnett Brass & Copper and went public in 1996 under the name Barnett Inc. In 2000, it was acquired by Wilmar Industries, soon after a group of private equity firms had taken over Wilmar. The merged company was headquartered in Jacksonville and renamed Interline in 2001. In 2004, the private equity firms decided to take Interline public, a common way for buyout firms to cash out in their investment after growing a business they acquired. Interline was publicly traded for eight years before a buyout in 2012 by Goldman Sachs Capital Partners and P2 Capital Partners. The two private equity firms paid $1.1 billion for Interline but sold it to Home Depot in 2015 for $1.625 billion, making a half-billion-dollar profit in three years. Interline’s last financial report as an independent company showed revenue of $859 million in the first half of 2015.
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Jacksonville is the heaqquarters of Interline Brands.
APR Energy Founder and Chief Executive John Campion.
APR Energy APR Energy was attracting international notice for its business of building fast-tracked power plants in emerging markets. However, two years of losses because of projects in risky countries that had to be abandoned forced the publicly traded company to seek private equity help. A consortium of private equity investors bought the Jacksonville-based company for about $250 million in January 2016 and agreed to provide $200 million in new capital after the buyout. The investor group included a firm run by former U.S. Secretary of State Madeleine Albright. APR Chief Executive John Campion said Albright’s involvement has helped the company’s credibility, assuring business partners that the company conducts business properly. APR reported revenue of nearly $500 million in 2014, its last full year before agreeing to the buyout in late 2015.