SouthPac, Skidmore family office make Cinnaroll Bakeries their debut deal

Skidmore Development Group and SouthPac Partners have joined forces in the inaugural deal of both firms, investing in a maker of gourmet cinnamon rolls.

Skidmore and SouthPac last week announced their acquisition of Cinnaroll Bakeries for an undisclosed sum. The baked-goods specialist was sold by senior executives Barry Wolton and Craig Parsons, its owners since 2007.

Launching in 1987 as an affiliate of U.S.-based Cinnabon, Cinnaroll a decade later became an independent company with headquarters in Calgary. Today it markets two brands, Cinnaroll by Baker Boys, a wholesale manufacturer, and CinnZeo, a network of 72 corporate and franchised café-style stores.

The new owners plan to build on Cinnaroll’s 30 years of growth, Skidmore Managing Director and CFO Jas Boparai and SouthPac Managing Partner Jeremy South told PE Hub Canada.

The firms aim to expand the wholesale business, which sells to groceries and food-service companies, by adding to its North American customer base, Boparai and South said. Priority will be given to opportunities in the United States.

Skidmore and SouthPac will also focus on increasing the size of CinnZeo’s global franchise footprint, they said. To do this, the strategy will look beyond the network’s existing mall locations in Canada, Mexico and the Middle East to other high-traffic venues and regions.

Growth initiatives will be supported by Cinnaroll’s long-standing management team and advice from Wolton and Parsons, who will play a transitional role, Boparai and South said. They expect to hire a new CEO in the near future.

The Cinnaroll acquisition officially introduces Skidmore, a family office, and SouthPac, a private equity firm, to the market.

Vancouver’s SouthPac was founded in January by South and Managing Partner Chris Charlwood to invest in companies in consumer, business services, real estate and other industries in Western Canada and Northwestern United States. It has a particular interest in backing MBOs and other ownership transitions.

“There’s a huge wave of ownership transitions coming in Western Canada,” South said. “At the same time, there are relatively few value-added funding options for companies with EBITDA below $5 million or where profits are going in the wrong direction.”

Deal-making will tap the principals’ experience and networks attained in prior careers. In South’s case, this includes his role as a co-founder and managing partner at Second City Capital, a PE firm affiliated with Gibralt Capital Corp, the family office of Sam Belzberg.

SouthPac will deploy $10 million to $30 million to mostly majority deals. They will be capitalized by the principals and some 30 wealthy investors, giving the firm room to increase resources as needed and hold assets indefinitely, South said.

Skidmore, the family office of Thomas Skidmore, also launched in January. Thomas Skidmore, a member of British Columbia’s renowned Skidmore clan, built and led a number of businesses, among them Glentel, a mobile phone retailer bought in 2015 by Bell and Rogers for $670 million.

The Vancouver firm will invest directly in small and mid-market companies in retail, distribution, real estate and other industries across North America, Boparai said. It will invest flexibly, without fixed timelines or targets, and with a preference for taking control stakes in growth and consolidation opportunities.

Skidmore’s deals will leverage the founder’s 40-plus years of operational experience. It will also rely on an investment team made up of other Glentel veterans, such as Boparai, who was with the company for 10 years and served as its executive vice-president and CFO.

Cinnaroll is the latest in a string of recent deals in Canada’s baked goods industry. They include last year’s sale of Give & Go Prepared Foods by OMERS Private Equity to Thomas H. Lee Partners, reportedly valued at about $1 billion. In February, Give & Go bought Uncle Wally’s Bake Shoppe.

Additionally, Kilmer Van Nostrand in April sold English Bay Batter to Cérélia, a portfolio company of IK Investment Partners.

Photos courtesy of Cinnaroll Bakeries Ltd