SFW Capital reaps 9x its money with Spectro sale

SFW Capital Partners sold Spectro Scientific after more than seven years, earning a huge return on its investment.

Ametek Inc said Tuesday it acquired Spectro for about $190 million.

Spectro provides predictive analytics that monitor the condition of assets.

The Chelmsford, Massachusetts, company offers on-site oil analysis of machinery and industrial equipment that helps users like maintenance engineers and plant managers better understand the condition of their machines.

Spectro is the exclusive provider of oil and industrial fluid analysis for the U.S. military.

The key to Spectro’s success is that “people want information at the site where their machines are, not three weeks from now or when results come back from the lab,” a source said.

SFW bought Spectro in July 2011 from QinetiQ Group for $20.5 million, Buyouts reported. Spectro at the time had 35 employees and generated less than $20 million of revenue, the person said.

The company currently produces about $50 million in annual sales and employs about 150 people. It joined Ametek’s electronic instruments group.

SFW Capital put Spectro up for sale in the later summer or early fall, tapping Joel Cohen of Robert W. Baird & Co to run the process. PE firms bid for Spectro but were shut out, the source said.

Strategics were the final parties, with Ametek — which is publicly traded on the NYSE — emerging as the winner.

SFW made 9x its money with the sale of Spectro, the person said.

SFW calls itself a specialized PE firm because it invests in analytical tools and related services businesses. Its companies “help people make better decisions or makes them more efficient,” the source said.

The portfolio companies at SFW typically provide analytical instrumentation, software, information, control and monitoring solutions, industrial and lab automation, as well as consumables and related business services.

The middle-market firm can invest equity from $15 million to $20 million up to as much as $150 million.

The PE firm has raised two funds. In 2015, SFW’s second pool closed on more than $345 million. The firm’s first fund raised $305 million in 2008, PitchBook said. Spectro was a Fund I investment.

Action Item: For more information on Spectro, check out the company’s website here.