TorQuest sustains brisk deal pace with sale of Spinrite to Comvest

TorQuest Partners has sold Canadian yarn business Spinrite, capping an especially busy season of exits and acquisitions for the private equity firm.

The Toronto investor today announced the sale of its majority interest in Spinrite, North America’s largest consumer craft yarn maker, to Comvest Partners. Terms weren’t disclosed.

JW Levin Management Partners co-invested with Comvest.

Based in Listowel, Ontario, Spinrite produces tens of millions of yarn balls annually for a growing population of knitters and crocheters.

Manufactured at factories in Listowel and Washington, North Carolina, the yarn is packaged under six brands, including Bernat, Patons and Caron, for sale to big retailers, such as Michaels and Walmart, as well as small merchants.

The company started out more than a century ago as Perfect Knitting Mills, founded by a German immigrant to Canada. The modern Spinrite took shape beginning in 1952 as its new owner, the Hay family, introduced a focus on craft yarn and bought up competitors.

The business was sold in 2004 to Sentinel Capital Partners, reportedly for about $81 million. The following year, Spinrite was taken public as an income trust, raising $203 million.

However, the listed Spinrite met with numerous challenges, in large part due to the end of a recent knitting boom. Sentinel reacquired it in 2007.

Spinrite was in comeback mode when TorQuest acquired it in 2015 in partnership with senior management, led by CEO Ryan Newell. The firm’s point man on the deal was Partner Daniel Sonshine.

Over the past 2 1/2 years, TorQuest backed initiatives to build on Spinrite’s market position. They included product innovation and a digital strategy that is reportedly boosting the company’s profile among new generations of yarn buyers, as well as online sales.

Brisk deal pace

The Spinrite sponsor-to-sponsor deal is the latest of multiple transactions TorQuest has completed over the past 10 to 12 months.

They include more liquidity events, such as last week’s sale of Envirosystems, an industrial and waste management services provider. Acquired in 2015 by TorQuest, Envirosystems was sold to Terrapure Environmental, a portfolio company of Birch Hill Equity Partners.

TorQuest also last month wrapped up its sale of building-supplies distributor WSB Titan, acquired in 2016. WSB went to GMS for about $800 million.

And earlier in 2018, TorQuest sold a portion of its interest in Thinking Capital, a small-business-loan provider, to Purpose Financial. It did the same last August with SCM Insurance Services, facilitating a majority investment by Warburg Pincus.

Along with shedding portfolio assets, TorQuest has been steadily adding to them.

The firm’s latest platform investment is Rubicon Pharmacies, an owner and operator of retail pharmacies. In April, Rubicon was merged with Amenity Health Care, which TorQuest acquired in 2017.

Earlier this year, TorQuest bought a minority stake in A&W Food Services, a franchisor of a quick-service burger chain. And last November it invested in TEAM Cos, a payroll, production management and business affairs solutions provider.

Rubicon, A&W and TEAM are three of four platform deals done by TorQuest Partners Fund IV, which closed at its $925 million hard-cap target in 2016. The fund’s inaugural investment, Can Art Aluminum Extrusion, was made the same year.

Fund IV, TorQuest’s largest fund to date, has enabled the firm to undertake more and larger control investments in Canadian and U.S. mid-market companies, a fact that helps explain the recent high rate of activity.

TorQuest was founded in 2002 by Senior Managing Partner Brent Belzberg, one of Canada’s best-known buyout veterans, and Managing Partner Eric Berke. It oversees more than $2 billion in capital.

Update: This story was updated to reflect JWLMP’s investment in Spinrite alongside Comvest.