Fremont makes handy profit on tools exit

The San Francisco buyout fund invested $190m in Tapco International across three funds and receives $715m in a sale to a strategic buyer.

Fremont Partners, the San Francisco buyout firm, has sold residential exteriors tools company Tapco International to publicly traded Headwaters Incorporated for $715 million (€586 million) in cash.


Since 1999, Tapco’s pro forma net income and pro forma earnings per share have nearly tripled, according to the press release. Tapco’s EBITDA for the latest 12 months were approximately $77 million.


Fremont’s original investment in the company was in 1999 from Fremont Partners II and a co-investment partnership. The two vehicles invested $100 million and $50 million, respectively, according to a press release. Tapco, located in Wixom, Michigan, purchased Vantage Building Products 2002 with financing from a $41.5 million investment from Fremont Partners III.


With the exit, Fremont Partners II realizes a gross IRR of approximately 22.3 percent and Fremont Partners III realizes a 31.8 percent IRR. The distribution to limited partners brings to a total of $742 million capital returned to limited partners in the second fund, or 124 percent of the vehicles invested capital.


James Farrell, managing partner of Fremont Partners, said in a statement: “Today's sale represents an excellent outcome for our investors and is representative of our investment approach: acquire businesses with attractive operating fundamentals and then work in partnership with management to strengthen the strategic and financial position of those businesses through growth strategies and operating improvements.”


Fremont Partners II is a 1996 fund with $605 million in commitments. Fremont Partners III, closed in 2001, has $920 million in committed capital.