Sentinel deal spree takes Fund IV past halfway mark

The lower mid-market firm has completed three investments this year, finding attractive opportunities in the industrial, restaurant and healthcare sectors.

For Sentinel Capital Partners, the US lower-mid market has never looked better.

New York-based Sentinel completed its third investment of 2012 Tuesday, acquiring industrial casting company Colson Group.

“The lending markets are very strong right now and the economy is recovering, so companies are performing better,” Sentinel partner Paul Murphy told Private Equity International. “That means a lot of people that had been wanting to sell their companies over the last couple years but hadn’t had the financial performance or the financial outlook are now bringing their companies to market.”

The investment brings the firm’s $765 million fourth fund to more than 50 percent invested.

Earlier this month, Sentinel acquired Southeastern US restaurant chain Huddle House, a business with close to 400 units and $225 million in annual sales.

“Huddle House is a real brand with good market share,” Murphy said, adding that the US economic recovery has led to consumers having “a little bit more discretionary income”.

In addition to the industrial and restaurant sectors, Sentinel has also been focusing on the healthcare sector. In March, the firm invested in Capitol Spine & Pain Centers, an add-on acquisition to portfolio company National Spine & Pain Centers.

Sentinel has also been active on the exit front, selling corporate training company Inscape Publishing for $85 million in February.

“We think the exit environment is very good right now,” Murphy said. “Interest rates are very low, so there’s borrowing capacity.”

The firm, which manages $1.25 billion in capital, typically focuses on companies in the aerospace, defense, business service, consumer product, distribution, food, restaurant, franchising, healthcare services and product and industrial manufacturing industries.

Sentinel, which made four new investments in all of 2011, will continue to look for opportunities this year to take advantage of the promising market conditions.

“We’re not done yet for the year,” Murphy said.