Car talk: Investcorp, Clearlake, Atlantic Street snatch up parts makers

'There is a very large installed base of cars and heavy-duty trucks on the road and over time they need replacement parts,' said Investcorp's Steve Miller.

Private equity dollars are streaming into the automotive aftermarket, spurred by shortages of parts for new cars, snarled global supply chains and rising prices. These market forces all add up to keeping cars and trucks on the road for longer, which is good news for PE firms investing in parts makers. PE Hub has noted a flurry of recent deals involving parts for heavy trucks, off-roads vehicles, racing cars, motorcycles and even electric vehicles.

“The supply chain disruption did have one positive effect as a demand driver,” Steve Miller, Investcorp’s managing director told PE Hub in an email exchange. “It has limited the number of new trucks/cars that could be produced, which means the average car or truck on the road has gotten a bit older. Older trucks and cars are more likely to need aftermarket parts, so that benefits the industry as a whole.”

Consumers may be benefiting from lower prices in parts for their old cars. “Consumers can buy parts with comparable quality to an [original equipment manufacturer] part in the aftermarket, but at a lower price. This value proposition always exists, but it is typically more pronounced in times of economic uncertainty when both businesses and consumers may trade down to save money.”

Earlier in August, Investcorp merged S&S Truck Parts with Midwest Truck & Auto Parts.

The Manama, Bahrain and New York-based private equity firm has a long and successful track record in the space, having exited previous portfolio companies Arrowhead Engineered Products, FleetPride and American Tire Distributors.

And Investcorp is far from the only PE firm doing deals in the space.

Aftermarket stars

Earlier this week, All Star Auto Lights, a portfolio company of Greenwich, Connecticut-based Atlantic Street Capital, announced the acquisition of Blackburn OEM Wheel Solutions, a supplier of new and refurbished steel and alloy wheels. The deal marked the third acquisition in aftermarket wheels for All Star since 2021 and helps expand the company’s offerings beyond its traditional auto lights business.

“With 13 sites and over 400 employees, All Star is positioned as a national player with collision and body shops, tire and service centers, rental car, and auction house customers to profitably repair cars faster with the highest value OEM alternative replacement parts,” said Atlantic Street partner Phil Druce in the deal announcement.

Earlier in August, Hidden Harbor Capital Partners, a Boca Raton, Florida-based firm, scooped up Dayco, an engine products and drive systems supplier with 40 locations in 22 countries founded in 1905.

In July, Clearlake Capital Group acquired BBB Industries, a sustainable manufacturer focused on the automotive aftermarket sector. BBB operates in 64 countries through 5 divisions, and has multiple facilities and distribution centers located throughout North America and Europe. Its newest division, TerrePower, focuses on electric vehicle batteries.

In June, Clearlake-backed Wheel Pros, which designs, manufactures and distributes aftermarket vehicle products acquired Transamerican Auto Parts (TAP), a Compton, California-based company working within the same space for off-road Jeep and light truck parts and accessories. In May, the Lexington, Kentucky based MiddleGround’s portfolio company Race Winning Brands scooped up Haltech, a designer, manufacturer and distributor of  engine management electronics that focus on performance racing and enthusiast end users. This marks MiddleGround’s third add-on acquisition by RWB since the firm acquired the platform in December 2021. Haltech’s products are used primarily to control engines by monitoring engine and driver data inputs to calculate optimal performance output, as well as displaying various engine performance parameters to the driver, the company said.

Also in June, Incline Equity Partners, a Pittsburgh-based private equity firm, invested in Raney’s, an ecommerce distributor of aftermarket heavy-duty truck parts and accessories. “The shift to online sales and increasing desire for customization creates significant demand for Raney’s product set,” said Leon Rubinov, senior partner at Incline, in a press release. “To build upon this momentum, we plan to invest in technology to improve inventory management capabilities and leverage digital marketing to engage with new and existing customers.”

In May, BRS & Co-backed Tolemar, a Huntington Beach, California-based producer of parts for motorcycles and ATVs made three acquisitions: Todd’s Cycle, a handlebar parts and accessories brand for motorcycles; 5150 Whips, a manufacturer and marketer of LED lighting and safety flags for UTVs; and Boat Whipz, a manufacturer and marketer of LED lights for off-road and watercraft vehicles.

Also in May, New York-based Kinderhook Industries-backed All States Ag Partners acquired Dominion Equipment Parts, a Richmond, Virginia-based distributor of rubber tracks, dumping equipment and other parts for heavy construction equipment for dealers and consumers in both the US and Canada.

Parts

Moving forward, we expect to see many more deals for third-party car parts. As Investcorp’s Miller said, the sector is “large and fragmented with predictable, steady growth.”

He concluded: “There is a very large installed base of cars and heavy-duty trucks on the road and over time they need replacement parts due to the wear and tear of usage,” Miller said. “This creates a higher degree of resiliency across market cycles, as demand is predominantly driven by auto and truck sales over many previous years.”