Clairvest Group is seeing a lucrative payday following the private equity firm’s sale of a Canadian out-of-home advertising business and the refinancing of a U.S. casino.
This month Clairvest sold Cieslok Media, a Toronto operator of large-format digital and static billboards in cities across Canada. The buyer was Bell Media, a multimedia subsidiary of BCE.
Terms weren’t disclosed, but Clairvest said it realized cash proceeds equal to 8.4x of invested capital. That translates into an IRR of 92 percent.
The Cieslok sale was preceded by a US$600 million recapitalization of Rivers Casino, a Des Plaines, Illinois, gaming and entertainment complex backed by Clairvest. The deal, closed in December, awarded the investor a cash distribution.
In a release to shareholders, Clairvest said the refinancing payout brought total distributions from Rivers Casino to 4.3x of invested capital.
These two deals, occurring a month apart, boosted the performance of Clairvest’s fourth mid-market fund. The firm estimates they bring the realized returns of Clairvest Equity Partners IV to 5.4x of invested capital and an IRR of 49 percent.
Clairvest, one of Canada’s oldest PE firms, has over its history racked up a number of strong realizations, some of them award-winners. In an interview with PE Hub Canada, Managing Director Mitch Green noted the Cieslok return is “one of our better ones.”
Cieslok’s rapid ascent
Cieslok Media was formed in 2013 with the management buyout of the Canadian division of Titan Outdoor, then majority-owned by Welsh, Carson, Anderson & Stowe. Clairvest invested $15 million in the MBO.
The new company was named after Clairvest’s operating partner, Jörg Cieslok, a German-born serial entrepreneur and pioneering designer of creative outdoor advertising placements across North America.
Clairvest, a domain investor with experience in the media industry, was “excited” to collaborate with the entrepreneur and help build the small Titan unit into “a leading, independent out-of-home operator” capable of “aggressive growth,” Green said.
To do this, the partners focused on expanding Cieslok’s digital-sign inventory and launching a mobile-advertising offering. This was intended to take advantage of a broader shift from static to digital media that promised large revenue-multiplier effects. The company also undertook acquisitions to increase its geographic footprint.
In three years, Cieslok emerged as a pan-Canadian business with increased owned-signage, including the iconic signage at Toronto’s Yonge and Dundas Square. It also showed outsized revenue growth, as well as “significant material EBITDA growth,” Green said.
Not surprisingly, Clairvest began to attract “considerable inbound interest” in the company, Green said, resulting in the sale to Bell Media.
Looking for more deals
Clairvest’s success with Cieslok encouraged it to explore other media-related opportunities. Last year, the firm closed a second deal, investing US$20.5 million in Digital Media Solutions, a U.S. performance marketing and lead generation company.
Green said Clairvest is “actively looking for more opportunities” in the space. It is currently doing “domain work,” he added, including research and outbound marketing.
Gaming is another industry in which Clairvest specializes. In the past 15 years, it has backed 10 gaming businesses, including Rivers Casino. In 2010, the firm and co-investors committed US$72 million to a partnership with Neil Bluhm, a managing principal at Walton Street Capital, to build the casino. It opened in 2011.
Toronto-based Clairvest, a publicly listed firm, is currently investing from Clairvest Equity Partners V, which raised $600 million in 2014. Fund V has so far invested $116 million in three investments, including DMS.
Fund IV raised $467 million in 2010. Fully invested, it has backed 11 companies. Two of them, including Cieslok, have been exited.
Clairvest’s 17-member investment team is led by co-CEOs and Managing Directors Jeff Parr and Ken Rotman. The team has accounted for 42 investments and 29 realizations since 1994, achieving 3.1x invested capital and a 24 percent pooled IRR.
Photos of Cieslok Media billboards in Toronto courtesy of Cieslok Media Ltd