Harvest to exit rollup for $124m

The New York private equity firm will sell a vintage 1996 platform company after seven add-on acquisitions.

New York-based private equity firm Harvest Partners announced today the sale of portfolio company Edgen Corporation, a manufacturer of carbon and alloy pipes, to fellow New York investment firm Jefferies Capital for a total of $124 million (€94 million).

Edgen, the oldest company in Harvest’s existing portfolio, was initially acquired in October 1996 for $55 million. The original equity investment was reportedly $18 million with $10 million contributed by Harvest and the remainder funded by co-investors including Banc One Equity Partners, Deutsche Bank and MassMutual.

Through a series of seven acquisitions, Harvest grew the business from approximately $60 million in sales in 1995 to over $200 million in revenues at the time of the Jefferies purchase. Although the total equity invested over the years was not disclosed, Colin Farmer, a principal at Harvest, indicated that the firm “did realize a profit on the investment.” Dan O’Leary, who was recruited two years ago to run Edgen, will remain as chief executive officer.

The current transaction, which was signed at the end of 2004, marked the culmination of a busy year for Harvest. Over the past twelve months, the New York buyout shop has sold three portfolio companies (including Edgen) and completed four new acquisitions. In a sign of the increasingly popular trend of sponsor-to-sponsor deals, five of the seven transactions were consummated with other private equity firms:  the sale of Edgen to Jefferies; the partial sale of AMH, a manufacturer of building products, to Investcorp through a $268 million recapitalization; the December 2004 purchase of baby care and juvenile products manufacturer Evenflo from KKR; the buyout of bus manufacturer New Flyer Industries from KPS; and the acquisition of Communications Supply Corporation, a distributor of network infrastructure products, from UBS Capital.

Harvest Partners, founded in 1981, currently has over $1 billion of capital under management. The firm is currently investing Harvest Partners IV, a $558 million fund that closed in 2002.