OpEx Awards winner Americas: Blue Point Capital Partners – Selmet

Blue Point identified Selmet as an attractive prospect due to its strong position in a changing market and was able to triple earnings.

In the seven years that BluePoint Capital Partners held Selmet before selling it to CPP, a Warburg Pincus portfolio company, the revenues tripled and the EBITDA increased over 400 percent, according to market sources.

BluePoint acquired Albany-based Selmet in its 2006 Fund II from founder Larry Sharpf in 2011.

Selmet, a manufacturer of titanium castings for the aerospace industry, makes parts for Boeing 737, Airbus A320 and the F-35 Joint Fight Striker among others. It was an attractive acquisition for several reasons, according to Mark Morris, partner and Selmet deal lead at BluePoint.

The industry was transitioning to titanium as lightweight and stronger material for next-gen aircraft and engines. There were high barriers to entry, Selmet was one of the four primary suppliers of titanium aerospace and defence castings in the US and had an exceptional management team, Morris says.

BluePoint set about making operational improvements and bringing add-ons to grow Selmet’s business.

The acquisition of Washington-based Onamac Industries in 2014 and Oregon-based Western Metrology in 2015 helped expand Selmet’s geographical footprint and added machining capabilities the company did not previously have. The in-house machining capability allowed Selmet to capture incremental margins.

Blue Point also helped improve margins with an almost 20 percent savings in raw material by identifying and sourcing production materials such as yttria, garnet sand and wire mesh from Asian suppliers.

The BPCP Shanghai team was on the ground and hands-on and provided guidance to the management team on supplier selection, according to Morris.

BluePoint supported more than $75 million of capital investments in expanding and building out new infrastructure for Selmet. Selmet added another 90,000 square feet to its facility in Albany, New York, and Onamac moved to a larger facility that helped it increase in-house machining capabilities.

During the hold period the team at Selmet increased from 250 people to 850 at exit and Rick Kenyon led the company as its chief executive officer through the period.

BluePoint also utilised the resources of its operating partners to help Selmet management with guidance and direction. These included Tom Cresante who previously held C-suite positions at Special Devices and Safety Components International and was instrumental in Selmet’s strategic planning efforts. Ray Laubenthal, director of BluePoint’s former portfolio company, Quality Synthetic Rubber, had a strong aerospace manufacturing background that helped give the Selmet board a unique industry perspective.

These strategies helped Selmet win numerous new programmes that drove its market share well above the eight percent at entry; importantly, BluePoint helped develop a sales structure to target next generation commercial aerospace and defence programmes and a strategic pricing strategy for revenue margins enhancement.

On exit in August 2018, Selmet’s topline growth had increased over 200 percent, earning the fund an attractive return for its investors, sources say.

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