Castle Harlan is a private equity

Private equity

Private equity, in finance, is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange....

 firm based in New York

New York

New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...

 that focuses on buyout

Buyout

A buyout, in finance, is an investment transaction by which the ownership equity of a company, or a majority share of the stock of the company is acquired. The acquiror thereby "buys out" control of the target company....

s and growth capital

Growth capital

Growth capital is a type of private equity investment, most often a minority investment, in relatively mature companies that are looking for capital to expand or restructure operations, enter new markets or finance a significant acquisition without a change of control of the business.Companies...

 investments in middle-market companies across a range of industries. Founded in 1987, Castle Harlan invests in controlling interests in middle-market companies in North America and Europe, as well as in Australia and Southeast Asia through Castle Harlan Australian Mezzanine Partners (CHAMP Private Equity). Castle Harlan traces its roots to the start of the institutionalized private-equity business in the late 1960s.

History

Castle Harlan was founded in 1987, but traces its origins to the 1960s, when John Castle headed all of the private equity activities, including the Sprout Capital Group, at Donaldson Lufkin & Jenrette (“DLJ”). At that time, DLJ used some of the first limited partnerships to bring institutional investors into private equity investing. Subsequently, Castle rose to be President and Chief Executive Officer at DLJ during the period of 1979 to 1986.

Leonard Harlan joined DLJ in 1965 and was a friend of Castle. Harlan left DLJ in 1969 and formed a successful real estate investment group, The Harlan Company. In 1987, Castle and Harlan, with a handful of others, raised $125 million for its new limited partnership, Legend Capital Group, L.P., to invest in leveraged buyout transactions.

Today, the Castle Harlan team of approximately 20 investment professionals is notable for its stability and experience. The firm's senior principals have an average tenure with the firm in excess of 15 years. The firm makes investment decisions consensually, with all of the firm's professionals participating. Castle Harlan is supported by a network of affiliates -- present and former executives of portfolio companies, side-by-side investors in funds, and friends of the firm -- who help Castle Harlan maintain a strong operating focus by finding or analyzing potential acquisitions, serving on boards and management teams, contributing industry expertise and introducing other executives and experts.

Investments

Since its inception, Castle Harlan has participated in eight private equity funds, five in the United States and three in Australia. The U.S. funds are:

• Castle Harlan Partners V, L.P.,
• Castle Harlan Partners IV, L.P.,
• Castle Harlan Partners III, L.P.,
• Castle Harlan Partners II, L.P. and
• Legend Capital Group, L.P.

These partnerships, together with the three Australian funds, have represented committed equity capital of approximately $6.0 billion. The firm’s limited partners have included many of the nation's largest pension funds, college endowments, insurance companies, banks and high-net-worth families. In addition, several European, Middle Eastern and Asian institutional investors are also investors. Castle Harlan’s team of 18 investment professionals has completed over 50 acquisitions since its inception with a total value of approximately $10 billion. Castle Harlan currently manages investment funds with equity commitments of approximately $3.5 billion.

Current and former portfolio companies include IDQ Holdings, Inc., the largest provider in the U.S. of aftermarket automotive air conditioning repair products for the do-it-yourself market; Pretium Packaging, LLC, a leader in short-run plastic bottles; Americast Technologies, Inc., a leading North American designer and manufacturer of large, highly engineered steel and complex ferrous alloy castings, Bravo Brio Restaurant Group, Inc., which owns and operates more than 50 mid-to-upscale Italian restaurants, and United Malt Holdings.

Investment Criteria

Castle Harlan focuses on investing in control positions in middle-market private companies. The firm’s philosophy is to achieve excellent returns by investing at sensible prices in companies that offer opportunities for solid, attainable growth. In evaluating investment opportunities, Castle Harlan looks for established and seasoned businesses with strong market positions and a record of steady, moderate growth. These are businesses that have shown they can successfully handle difficult or changing market conditions. The firm prefers to partner with existing managers, who know the business the best and can benefit from Castle Harlan’s creativity, management discipline and other professional skills. Properly aligning the interests of management and investors improves the likelihood of success. In order for Castle Harlan to acquire a company, the business must be priced realistically in terms of growth prospects and fundamental value in the marketplace.

Examples of investments made during the last decade.

Investment	Results
RathGibson	RathGibson is a leading manufacturer of highly engineered premium stainless steel and alloy welded tubing products. Castle Harlan purchased the company in February 2006 for $260 million. In August that year, RathGibson acquired a complementary tubing manufacturer, Greenville Tube Company, for $37 million. When Castle Harlan sold the company in June 2007 for $440 million, revenues and earnings had increased by approximately 50 percent. The Castle Harlan investment group’s return was 2.6 times its invested capital.
United Malt Holdings	Based in Omaha with operating companies in the U.S., Canada, Australia and the U.K., this is one of the world’s largest producers of malted barley for production of whiskey and beer. Castle Harlan and its Australian partner, CHAMP Private Equity, purchased it in September 2006 and sold it in 2009 to GrainCorp Ltd., a major bulk-grain handler and trader in Australia. Management and Castle Harlan invested in expanding plants and shifted the business from maximizing volume to customer-specific specialized products that supported premium prices. The Castle Harlan investment group made a return on investment of 4.5 times its invested capital.
AmeriCast Technologies	AmeriCast Technologies is a North American leader in the design and manufacture of large, complex steel castings. In November 2006, Castle Harlan took a controlling interest in AmeriCast. Organic growth and strategic acquisitions expanded the business approximately 70 percent by August 2008, when Castle Harlan sold its majority interest to Bradken Ltd, an Australian manufacturer of cast steel and other products, primarily for the mining and railroad industries, for approximately $288 million. The Castle Harlan investment group’s return was 2.6 times invested capital.
Polypipe Group	One of the two leading suppliers of plastic pipe systems in the U.K. and Ireland, Polypipe was purchased in 2005 by Castle Harlan and 50 Polypipe managers for $527 million from IMI plc, an international engineering company. Two years later, Castle Harlan sold its interest to company management and the Bank of Scotland for $880 million. Castle Harlan helped management refocus the company by concentrating on its core businesses. The Castle Harlan investment group realized a 4.5 times return on invested capital.
Horizon Lines	Horizon Lines is the only Jones Act container-shipping company servicing ports in the continental U.S. and Alaska, Puerto Rico, Hawaii and Guam. The Jones Act requires that maritime trade between U.S. ports be conducted exclusively by companies owned and organized in the U.S. that use ships built and registered in the U.S. and that employ U.S. crews. Horizon Lines benefits from limited competition, stable demand and diversity of freight carried for long-standing customers. Castle Harlan purchased the company in July 2004 for $650 million and worked with management to grow the business. In 2005, Horizon completed an IPO. Subsequently, there were three secondary offerings, and in 2007 Castle Harlan completed divesting its interest. The Castle Harlan investment group’s return was 3.2 times invested capital.
Ames True Temper	Ames, in business since 1774, sells 80 percent of the long-handled tools, such as shovels, rakes and hoes, used in the U.S. and is the market leader in North America for other lawn and garden products, including wheelbarrows, pots and planters. Castle Harlan bought the company in July 2004 for $380 million. Ames was sold, on September 30, 2010 to Griffon Corporation Griffon Corporation Griffon Corporation , founded in 1959, is a diversified manufacturing firm. Its primary divisions include, Home and Building Products , Clopay Plastics Products, and Telephonics Corporation...  for $542 million. The Castle Harlan investment group’s return was 2.1 times invested capital.
Austar Austar Austar is an Australian telecommunications company. Its main business activity is Subscription Television but it is also involved with internet access and mobile phones... United Communications, Inc.	Castle Harlan and CHAMP co-invested in 2003 in a majority interest in Austar, the leading provider of satellite pay television in non-urban Eastern Australia, by purchasing company debt from a Chapter 11 bankruptcy procedure for US$34.5 million. Austar was taken public through an IPO in Australia in 2005. The Castle Harlan investment group’s return was 7.2 times invested capital.
McCormick & Schmick	Castle Harlan owned McCormick & Schmick twice, first acquiring the company in 1994, building the business, then selling it in 1997. It bought the company back in 2001. McCormick & Schmick went public in 2004. The Castle Harlan investment group’s return was 4.5 times invested capital in the 1994-1997 period and 2.6 times invested capital in the 2001-2004 period.

CHAMP

In 1999, Castle Harlan teamed with Bill Ferris and Joseph Skrzynski of Australian Mezzanine Investments, one of Australia's leading and oldest private equity firms, to create Castle Harlan Australian Mezzanine Partners, also known as CHAMP. Together, Castle Harlan and CHAMP employ more than 35 investment professionals. CHAMP and its predecessor never invested in “mezzanine” (a.k.a. subordinated) debt. Rather, the term “mezzanine” was historically used in Australia as a reference to mid-market, developing businesses. CHAMP focuses on control investments in middle-market businesses with similar criteria to Castle Harlan. CHAMP also has an affiliate, CHAMP Ventures, that invests in small buyouts, non-control growth capital and venture capital.

Recent Awards

• 2003: Castle Harlan named winner of the 2003 Middle Market International Cross-Border Deal of the Year and winner of the 2003 Middle Market Media and Telecommunications Deal of the Year by M&A Advisor. This was for the acquisition of Austar United Communications, Inc.
• 2005: Castle Harlan named winner of the 2005 International/Cross-Border Deal of the Year by M&A Advisor. This was for the acquisition of Polypipe Group.
• 2006: Castle Harlan named with CHAMP the Private Equity Firm of the Year by M&A Advisor. From October 2005 through September 2006, the period covered for the award, Castle Harlan and CHAMP executed 24 transactions, including purchases, sales, add-ons and recapitalizations, with a total value of approximately $3.6 billion.
• 2008: John K. Castle is given the Lifetime Achievement Award by M&A Advisor.
• 2010: Castle Harlan and CHAMP recognized by The Australian Private Equity and Venture Capital Association (AVCAL) for its successful investment in United Malt Holdings.
• 2010: John K. Castle is inducted into the M&A Advisor Hall of Fame.
• 2010: Castle Harlan named as one of the “Consistent Performing Buyout Managers" by Preqin Private Equity Performance Monitor.

External links

• Castle Harlan (company website)