Sentinel Capital puts Engineered Controls on the block

Sentinel has tapped Robert W. Baird to run the auction, the people said. Elon, N.C.-based Engineered Controls, which makes valves and regulators, is expected to fetch $400 million, said one of the sources.

The process is at the midway point and is expected to attract bids from public companies in the flow control space, such as Flowserve and Pall, sources said.

Founded in 1908, Engineered Controls makes specialized pressure regulators, valves and other control equipment for use with liquefied and compressed gases. Sentinel acquired the company in August 2010. The investment came from the PE firm’s third and fourth fund.

Sentinel closed its fifth fund in July at $1.3 billion. Sentinel Capital Partners III raised $319 million in 2005, while Fund IV collected $765 million in 2009.

Sentinel Capital Partner IV LP generated a net IRR of 38.1% as of March 31, according to CalPERS. Performance data on Fund III could not be found.

New York-based Sentinel targets the lower middle market, investing up to $75 million of equity per deal in companies with $7 million to $35 million of EBITDA. Industries include aerospace/defense, consumer, healthcare and industrials. In July, Sentinel bought the industrial explosion protection businesses of UTC Climate, Controls & Security, which is a unit of United Technologies Corp.

The PE firm made five exits in 2012, namely of Chromalox, Southern California Pizza Co., Interim Healthcare, Massage Envy, LTI Boyd and Inscape Publishing. The firm also invested in Hospice Advantage, Northeast Dental Management, the Colson Group, Huddle House and National Spine & Pain Centers.

ECI referred calls to Sentinel, where officials couldn’t be reached for comment. Baird declined comment.

Luisa Beltran is a senior reporter for peHUB