Exclusive: Catterton Investing in Uppy’s

Catterton Partners has struck a deal to make an investment in Uppy’s, a Chester, Va.-based convenience store chain, and its gasoline distribution business, Southside Oil, according to a source familiar with the situation.

Greenwich, Conn.-based Catterton has partnered with the company’s founders, President and CEO Steven M. Uphoff and Vice President Linda Uphoff, for the transaction, making an investment alongside them in a new holding company.

The chain operates 42 Uppy’s convenience stores in the Southeast region with more than 550 employees. The stores feature branded in-store offerings from Subway and Dairy Queen. Uppy’s was included on Inc. Magazine’s list of fastest-growing companies at number 3,571 last year, with a 66.9% growth in revenues between 2008 and 2009. Last year the company had $192.9 million in sales.

For its part, Southside Oil provides gasoline to 109 company-owned, dealer-serviced gas stations. In 2009, Southside Oil acquired 172 retail gasoline stations from Exxon as major oil and gas refiners shed their retail operations in recent years. Southside Oil had $253 million in sales last year.

Middle market private equity firms haven’t successfully penetrated the US gas station and convenience store market. Family-owned chains like Sheetz, which had $4.4 billion in revenue in 2007, and Wawa, which operates 600 Mid-Atlantic region stores, have remained uninterested in outside capital.

The large market is marked by several notable deals. In 2006, Oak Hill Capital Partners led a successful exit of TravelCenters of America, a hospitality and fuel service chain with 162 locations. Oak Hill sold the company to a REIT for $1.9 billion. CVC Capital Partners acquired Pilot Travel Centers, the country’s largest operator of travel centers, in 2008. The company later added on, acquiring Flying J Inc., an oil and rest stop company, out of bankruptcy.  Recently Carlyle Group struck a smaller deal to invest $178 million into a renovation of 23 rest stops in Connecticut in partnership with the state. The deal allows Carlyle Group to install Dunkin Donuts stores (a portfolio company) into the state-owned rest stops.

Catterton Partners’ investment in Uppy’s and Southside Oil likely comes from Catterton’s $1 billion sixth fund, which closed in 2006. In November of 2009, the firm launched fundraising on a $200 million “top-off” vehicle called Catterton Partners VI-B LP. The firm had invested almost 60 percent of Fund VI by August 2008. Despite that, the “top-off” effort was apparently not a replacement for Catterton Partners’s seventh fund, peHUB reported at the time. Catterton Partners was at one point expected to come to market with a $1.25 billion to $1.5 billion seventh fund.

Update: A previous version of the article stated that Catterton Partners is acquiring Uppy’s and Southside Oil, when in fact Catterton is investing in Uppy’s and Southside Oil.

Previously: Catterton Raising Top-Off Fund; New Fund Coming “In The Future”