JW Childs in 5x exit to Ares and Leonard Green

The Boston-based mid-market investor will sell healthcare staffing firm CHG Healthcare Services in its only full exit of 2012.

Boston-based JW Childs Associates has agreed to sell healthcare staffing firm CHG Healthcare Services to Ares Management and Leonard Green & Partners.

Financial terms of the transaction were not disclosed, but a source familiar with the matter said the sale will generate a 5x return multiple and 35 percent internal rate of return for JW Childs. The deal is expected to close by the end of 2012.

CHG is the largest temporary physician staffing firm in the US, with seven offices and more than 1,400 employees. JW Childs purchased the business in 2006, investing on behalf of its $1.75 billion third fund, which is fully invested.

“We’ve had varying economic climates, but [CHG] was able to grow organically in each of the six years of our ownership,” David Fiorentino, partner at JW Childs, told Private Equity International, adding that the strong debt markets helped during the exit process. “If you have the right asset, it’s a nice time to approach the market with it,” he said.

CHG will be the only full exit for JW Childs this year. Earlier this month, the mid-market firm made a partial exit from publicly listed mattress company Mattress Firm.

On the acquisition front, JW Childs invested its special purpose acquisition company in August in tiling company The Tile Shop, now publicly traded on the NASDAQ. The firm has investments in seven other existing portfolio companies, including specialty product retailer Brookstone, men’s apparel company Joseph Abboud and drink sweetener product maker NutraSweet, according to its website.

JW Childs is understood to be having preliminary conversations with investors regarding a fourth fund, although Fiorentino declined to comment on fundraising plans other than to say the firm was “quite pleased with the performance of Fund II and Fund III”. Limited partners that committed to both Fund II and Fund III  include the Houston Municipal Employees’ Pension System, the State Universities Retirement System of Illinois, Kenyon College’s endowment and the University of Pittsburgh endowment, according to data provider Private Equity Connect.