ONCAP, the mid-market private equity arm of Onex Corp, has sold U.S. pizza-buffet chain Cicis, a portfolio company it held for close to a decade.
The deal was announced last week by Cicis and its new investor, the New York PE firm Arlon Group. Terms weren’t disclosed.
Established in 1985, Coppell, Texas-based Cicis operates more than 440 franchised and corporate-owned restaurants in some 33 states. The company is best known for its value-priced buffet, which offers unlimited pizza, pasta, salad, soup and desserts.
ONCAP acquired a majority stake in Cicis from Levine Leichtman Capital Partners in mid-2007. Terms weren’t disclosed, but ONCAP reported investing US$50 million in equity.
On its website, ONCAP said Cicis was attractive because of what it called strong cash-flow characteristics, a solid franchise base and a unique position in the quick-service restaurant industry in the United States.
Cicis sales declined and it closed some restaurants in the wake of the 2008-2009 recession. In 2013, a seasoned franchise executive, Darin Harris, was brought in as CEO and tasked with leading a turnaround.
Cicis’ strategy, including new branding and menu options, appears to have paid off. The company pointed to 13 consecutive quarters of same-store sales growth as well as a pipeline of potential new franchisees and stores.
Arlon specializes in investments in the food and agriculture sectors. In a statement, Harris said the new partnership “will help us maintain the momentum we’ve achieved, accelerate our growth and fortify our revitalization strategy.”
ONCAP’s sale of Cicis comes about a month after the firm agreed to acquire Tecta America, one of the largest roofing contractors in the United States, from Oaktree Capital Management. The deal, valued at US$280 million, included a US$130 million equity investment by ONCAP and its partners.
ONCAP said Tecta is likely to be the last platform investment of ONCAP III, which raised $800 million in September 2011.
With ONCAP III approaching full investment, ONCAP and Onex are now preparing to launch ONCAP IV, Buyouts reported in May. The Cicis exit, which reduces ONCAP’s current portfolio companies to nine, provides additional impetus to these plans.
Cicis is ONCAP’s first disclosed liquidity event since late 2014, when it sold Mister Car Wash to Leonard Green & Partners. The firm received net proceeds of US$423 million from its investment, representing a gross return of 36 percent.
Cicis is the second company Arlon bought this year from a Canadian PE firm. In July, Arlon acquired Idaho Pacific Corp, a U.S. maker of dehydrated potato products, from Novacap.
ONCAP and Onex are headquartered in Toronto.
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