CHB Capital Partners has exited its investment in HiRel Systems, selling the company for $85 million. Minnetonka, Minn.-based HiRel Systems is a designer and manufacturer of high reliability transformers, inductors, coils, and power conversion products. The sale to publicly traded Vishay Intertechnology Inc. generated a 7.1x gross cash-on-cash return and a 25.9% gross IRR for CHB Capital, the firm said. It is the sixth exit for the firm’s second fund.
CHB Capital Partners has sold HiRel Systems, LLC for $85 million, marking the sixth exit for the firm’s second fund, CHB Capital Partners II, LP. The sale generated a 7.1x gross cash-on-cash return and a 25.9% gross IRR for CHB. The firm’s October 2002 investment in HiRel was also its sixth investment in that fund.
Minnetonka, Minnesota-based HiRel Systems (www.hirelsystems.com) is a leading global designer and manufacturer of high reliability transformers, inductors, coils, and power conversion products for custom applications within the medical, military, aerospace and specialty industrial and commercial markets. The company was acquired by Vishay Intertechnology, Inc. (www.vishay.com) a Fortune 1,000 company listed on the NYSE (VSH) and one of the world’s largest manufacturers of discrete semiconductors and passive electronics components.
“In the over nine years CHB was involved with HiRel, the company was able to grow its revenue and EBITDA by over 350%,” said John Flanigan, Co-founder of CHB. “At CHB we back strong, in-place management teams with the capital and expertise required for them to grow their businesses significantly faster than their industries. HiRel is a perfect example of this, a niche player in a global market that through investments in capability and select acquisitions was able to become a market leader. We couldn’t be happier with the outcome nor with the experience of working alongside such a talented management team.”
Paul Larkin, President and CEO of HiRel Systems, said, “With CHB’s support we were able to make three acquisitions, diversify our manufacturing base by adding plants in China and the Dominican Republic and make significant investments in lean manufacturing, information technology, and design engineering capability. This dramatic increase in scale allowed us to focus on the most attractive end-use markets and to take advantage of key trends in those markets favoring larger, more sophisticated providers.”
Lincoln International advised HiRel Systems in the transaction. Davis, Graham & Stubbs LLP provided legal counsel.
Founded in 1993, CHB Capital Partners (www.chbcapital.com) invests in leveraged recapitalizations, management-led buyouts and growth equity investments, providing both equity capital and strategic, financial and operating expertise. The firm seeks to partner with strong, incentivized management teams and focuses on growing, profitable companies at the smaller end of the middle market, particularly in the niche manufacturing, distribution and service sectors.
CHB Capital Partners has completed 30 transactions – fifteen platform investments and fifteen add-on acquisitions – across its three investment funds.