Wellspring Goes On Tour With Travel Companies –

Anticipating a coming boom in wanderlust, Wellspring Capital Management LLC has put $40 million in equity behind a travel industry platform.

Travel Industry Partners Corp. already has made two acquisitions-Central Holidays, a travel package provider to Italy and the Mediterranean, and Swain Tours, which organizes tours to Australia, New Zealand and Africa. Travel Industry Partners will add five more tour operators before the end of May, according to Greg Feldman, a managing partner at Wellspring. Partners at the New York buyout firm did not disclose terms of the deals but said BankBoston was leading a syndicate of banks to provide a credit line for the acquisitions.

Industry sources have said that companies in the travel industry currently are selling for multiples between 6 and 6.5 times EBITDA.

Mr. Feldman said the travel service industry is attractive for roll-ups because it is highly fragmented, and no single company dominates the market. He also said that as an increasing percentage of the U.S. population falls into the over-50 demographic, demand for travel services will expand.

Travel Industry Partners will be headed by Phil Bakes, a former president of Eastern Airlines and Continental Airlines, and Andrew McKey, who hails from a financial background. According to Mr. Feldman, the two approached Wellspring with the proposed roll-up.

Wellspring’s travel industry playing field has some competitors: Berkshire Partners and Thayer Capital Partners also are establishing travel service platforms (BUYOUTS Nov. 9, 1998, p. 26).

Mr. Feldman said his firm could exit through an initial public offering, or by selling to a strategic consolidator, examples of which include American Express Travel Services, Carlson Wagonlit Travel and Royal Caribbean Cruises Ltd.

The deal marks the first investment out of Wellspring’s $270 million second fund, which closed last August.