Falfurrias Looking to Exit Bojangles’; Wellspring or Sun Capital Might Bite

Falfurrias Capital Partners will likely sell its majority stake in fried chicken mecca Bojangles’, sources familiar with the matter told peHUB.

The Charlotte Observer reported earlier today that the North Carolina-based private equity firm, which acquired its stake in 2007, is examining strategic alternatives. In this market, selling its stake in Bojangles’ would likely represent a substantial success for Falfurrias’ first fund, a $100 million vehicle.

Interested parties include Wellspring Capital Management and Sun Capital. One source told peHUB that the restaurant chain’s initial investors — high-net worth families that continue to maintain a minority stake — will likely not choose to exit.

“A sale isn’t necessarily imminent, but the process is,” the source said, adding that it is likely that a financial sponsor will step in, rather than a strategic bidder.

Another source told peHUB’s Luisa Beltran that Bojangles is worth about 7x EBITDA (based on category and geography). EBITDA was in the mid-$20 million range a couple of years ago. “Maybe it’s worth up over $30 million now,” the second source said.

An exit would come at a great time for Falfurrias. Last year, I reported at themiddlemarket.com that Falfurrias would seek to double its first fund in its second outing and aimed to collect $200 million from its next batch of LPs. In 2009, Bojangles’ refinanced with $70 million in debt from Bank of America, Wells Fargo, BB&T and Regions Bank.

Sun and Wellspring representatives weren’t immediately available for comment.

Luisa Beltran contributed to this report.