Blue Wolf cleans up with 4x laundry sale

The New York-based turnaround firm has sold Healthcare Laundry Systems, its first investment from its second fund.

Blue Wolf Capital Partners has sold Healthcare Laundry Systems to Crothall Services Group, generating a nearly 4x return multiple on the sale, market sources told PEI.

Healthcare Laundry Systems provides laundry services to hospitals and clinics in the greater Chicago area. Blue Wolf established the company in 2008 by acquiring and merging two businesses: Chicago-based Hospital Laundry Services, a not-for-profit company, and Northern Illinois Hospital Services. The acquisition was Blue Wolf’s first investment from its second fund, which closed on $118 million in 2008.

Consolidating the two businesses “really allowed us to begin to change HLS into a robust for-profit organisation while still providing a high level of service to the customers,” Blue Wolf managing partner Adam Blumenthal told PEI. During the two and half years Blue Wolf held the company, the firm improved HLS’ revenue by 50 percent and its employee base by nearly 25 percent.

“This is our only healthcare services business, but we certainly are looking to do more,” Blumenthal said.

Also this week, Blue Wolf sold a 15 percent stake in Gloucester Engineering Company to Kabra Extrusiontechnik, a publicly traded company on the Bombay Stock Exchange and the National Stock Exchange in India. Blue Wolf acquired Gloucester Engineering in January of this year.

“We think this is a good exit environment,” Blumenthal said. “Many businesses, including the ones that we owned, have been operationally strengthened through the cycle…and [those] who made it through are now feeling some confidence and looking to grow.”

Founded in 2005, Blue Wolf targets “unconventional” deal flow not touched by mainstream private equity firms, specialising in companies whose values are “obscured by complexity” in the form of labour union relations, government contracts and financial underperformance.