Tricor Pacific Founders Capital set out two years ago to build a portfolio of food, beverage and consumer-packaged-goods companies. In that time, the Vancouver family office has made big strides toward that goal.
Tricor Founders was launched as a partnership among food-industry executive Richard Harris, two of the founders of Tricor Pacific Capital, Rod Senft and Trevor Johnstone, and Derek Senft, Rod’s son.
In 2015, Tricor Founders began buying North American companies with EBITDA of $3 million to $10 million to hold indefinitely. It has closed four major investments and several add-ons. They form the nucleus of sector-themed platforms that hold the assets and acquire new ones.
PE Hub Canada sat down with Harris, once dubbed Tricor Founders’ “secret weapon”, to discuss recent deals, the family office’s progress, and where it goes from here.
Q: Presteve Foods, Tricor Founders’ debut investment, acquired La Nassa Foods this month. Why is this deal significant?
A: Tricor Founders had a concept of investing in a subset of the food industry. We started with seafood because we came across a quality opportunity in Presteve Foods [a harvester, processor and distributor of freshwater fish]. We felt it could be a good anchor for creating a platform in a large marketplace that showed strong demand but that was also highly fragmented.
La Nassa Foods was Presteve’s fourth add-on deal. It was different, however, because La Nassa was a competing processor. Its acquisition was strategic. It gave Presteve an ability to provide more secure and more frequent supply to customers.
As a result of the La Nassa deal, the other add-ons, and operational improvements, Presteve has doubled its revenue and profitability. It has been put in a new playground for what’s possible in the future.
Q: Last November, Tricor Founders acquired Fresh Selections, a manufacturer of ready-to-eat entrees. What drew you to the company?
A: Fresh Selections was a carve-out from HMR Foods, a portfolio company of Arlon Group. When HMR ran into trouble, we saw an opportunity to buy the Canadian division for a fair price.
The acquisition was made by Freshstone Kitchen, a new holding company focused on prepared foods. Fresh Selections is a small company, but we believe it’s well-placed to grow faster than it did as a subsidiary. Like Presteve, it will also help create a family of businesses in an accelerated fashion. We’re looking to do another deal soon.
Q: Freshstone is your third sector-themed platform. What is its investment strategy?
A: Prepared foods is a large space with a lot of fragmentation. Many companies are regional suppliers. They’re not the easiest businesses to operate because demand fluctuates, which requires a made-to-order approach.
But there’s also opportunity for quality companies that understand their customers. Fresh Selections, for example, makes entrees and appetizers with preservative-free, natural ingredients. That reflects good demand characteristics, as people these days are more interested in healthy eating.
We believe a focus on innovation and new products will help such companies succeed. Freshstone will provide a closely connected family of businesses with flexibility and access to know-how and technology. We plan to start in Canada and then create a beachhead in the United States.
Q: How do you feel about Tricor Founders’ progress to date?
A: I’m very pleased. Tricor Founders has come farther along than we thought it would at this point. We’ve already created three sector themes in our portfolio: specialty seafood and meats, edible gifting and prepared foods.
We’ve gained visibility and credibility, which has generated deal flow. Tricor Founders has also established itself as an investor with a different flavour from other private equity firms. We benefit from less of an emphasis on selling. We’re able to take considerable risk and move quickly as opportunities emerge.
I expect we’ll invest at a similar rate in the next 12 to 24 months. We can’t buy themes endlessly. Our top priorities will be to build out the portfolio with add-ons and attractive investments in an existing theme.
Q: What has changed for you in the transition from food-industry executive to investor?
A: My current role is not dissimilar from my prior one. But I spend more time thinking about whether a company will make an attractive investment and about how to allocate resources across a portfolio. That’s not the same as running a single business.
I think I’m on the same page as my private equity colleagues in approaching deals. We believe that what you pay is not always as important as what you buy. We want to be proud of the companies we’re associated with.
My role at Tricor Founders owes to my strong relationship with Rod Senft, developed when I headed Golden Boy Foods [a private-label food manufacturer backed by Tricor Pacific Capital over 2007-2014]. Rod has a sharp perspective about how to create value. He’s a big believer in operating talent.
Photo of Richard Harris courtesy of Tricor Pacific Founders Capital
Photo of fishing vessel courtesy of Presteve Foods Ltd