Bain Capital Private Equity rides the upside while getting partial liquidity with Imperial Dade

'We are living in uncertain times, and so we were interested in getting some partial liquidity for the investment,' Bain Capital Private Equity's Ken Hanau said.

Bain Capital Private Equity announced earlier this week that it was selling part of its stake in Imperial Dade, a maker of foodservice packaging and janitorial supplies, to Advent International. The deal gives Bain and Advent equal control of the portfolio company. Previous investors, including Audax Private Equity and the target’s leadership, retain significant stakes. To learn more about the deal, PE Hub caught up with Bain managing director Ken Hanau, who serves as co-head of industrials.

Bain initially invested in Imperial Dade in 2019. Since then, the portfolio company’s revenue has grown from $2 billion to $5 billion. The company also completed 26 acquisitions.

Today, the company employs roughly 6,400 people under the leadership of chairman Robert Tillis and CEO Jason Tillis, who is Robert’s son. The company controls a network of distribution centers totaling about 10 million square feet of warehouse space and serving about 90,000 customers.

Ken Hanau, Bain Capital Private Equity

Hanau said the company’s management led the maker of food packaging products on the right path in the face of enormous challenges, including the pandemic and the supply chain woes that broke other manufacturing companies.

Bain’s usual holding period is five years, but Imperial Dade grew quickly. “We didn’t have in mind that we would be doing a partial sale three years into the investment, but we have accelerated our growth plans,” Hanau explained.

“We are living in uncertain times, and so we were interested in getting some partial liquidity for the investment,” he said. “But at the same time, this is a very good asset that we believe is a long-term competitor and a true market leader in its space. We wanted to continue to ride the upside of that over a longer period of time.”

Describing Advent as a “high-quality partner,” Hanau pointed out that Bain has co-invested with Advent on other deals. Commenting on the Imperial Dade deal, he said, “It’s really kind of a hybrid, and we think it made sense to take chips off but still provide the long-term opportunity.”

Looking forward, Hanau sees potential in the food services sector as dining out takes center stage with fewer covid concerns. Imperial Dade also manufacturers customized products for the retail sector, hospitality, cruise lines, healthcare and facilities maintenance.

When asked about the current macroeconomic pressures, including inflation, Hanau said Imperial Dade will be able to withstand the challenging times, thanks to its superior purchasing power on sourcing as well as efficiency in passing through costs.

“The growth profile of the business is very good,” he said, while predicting that the business will have mid-single-digit growth, driven by organic growth and M&A.

Headquartered in Jersey City, New Jersey, Imperial Dade has expanded into other regions through acquisitions. In March, the company bought Toronto-based Veritiv Canada.

“We are really excited about the platform and the opportunity to add Canada to the mix and make this a true market leader in North America,” Hanau said.