FdG makes 5x return on footwear exit

The New York middle-market firm has sold Implus Footcare to private equity firm AEA Investors after a holding period of more than seven years.

Middle-market investor FdG Associates has exited its investment in Implus Footcare via a sale to New York private equity firm AEA Investors for a cash on cash profit in excess of five times the firm’s 2001 investment.

Further financial details of the transaction were not released.

New York-based FdG led the recapitalisation of the footwear accessories company in January 2001, taking a majority stake. “It was an FdG kind of transaction,” managing director Doug Dossey told PEO. “We love to partner as the first institutional partners with families and entrepreneurs.”

FdG was attracted to the president and chief executive’s aggressive growth plans to “take pretty high market share in insoles in the specialty market… and use that as the lever to add other shoe care accessories to those retailers”, said Dossey.

The company tripled its revenue during the course of FdG’s holding period, primarily due to strong distribution and organic growth.

Add-on acquisitions made during the holding period were shoe deodorizing company Sneaker Balls in 2007 and snow and ice traction device company YakTrax in 2006.

“We’re kind of old-fashioned in terms of how the game is played today,” said Dossey noting that FdG targets holding periods of four to six years. “We think it takes that long to really set the table before you start to eat.”

FdG entertained an exit six years into the holding period that “for one reason or another didn’t end up closing”, Dossey said. The firm has since been presented with a number of large acquisition targets and recognised that the FdG’s nearly fully divested first fund would not be able to continue to support the business.

The firm sought “a new partner with deeper pockets” to continue developing Implus with a focus on M&A opportunities, resulting in a sale to AEA Investors. AEA was founded in 1968 by the Rockefeller, Mellon and Harriman families with S.G. Warburg & Co.

Prior to the exit, Implus was one of the few remaining companies in FdG’s first institutional fund which closed on $205 million in 1999. The firm divested itself of stakes in Golf Galaxy, Industrial Control Distributors and Dentaquest in early 2007. FdG has invested two-thirds of its second fund which closed on $310 million in 2005.

FdG was originally established as a vehicle of the Fisher and de Gunzburg families. AEA Investors was founded in 1968 by the Rockefeller, Mellon and Harriman families with S.G. Warburg & Co.