Capstone Nutrition Wins “Manufacturer of the Year” for Second Year in a Row

Ogden, Utah, November 6, 2019 – Capstone Nutrition (“Capstone” or the “Company”), one of the largest contract manufacturers of health and dietary supplements in the United States, has received the 2019 Utah Manufacturer of the Year Award from the Utah Manufacturers Association (“UMA”). This is the 2nd consecutive year Capstone was awarded this honor. The UMA selected Capstone from among the most exceptional Utah manufacturers, who together produce more than $20 billion in economic output. Members of the Capstone team were presented the award at the annual UMA Awards Ceremony on Saturday, November 2nd, 2019.

“Among a field of very qualified manufacturers, we are thrilled to be recognized once again as UMA’s pick for Manufacturer of the Year. This back-to-back award validates Capstone’s remarkable efforts in continuing to embrace our cultural values as a team, and being disciplined in our individual roles. Our vision of ‘Life Improved’ means we share success as a team, including our customers, vendors, shareholders and community. Capstone’s success is due to our dedicated and talented people, and their families who support them,” said Jared Leishman CEO. “I’m proud to be part of a great team of people who love to work here, and who make some of the best and most innovative nutrition products in the world.”

Capstone continues to make huge strides in an enterprise-wide LEAN transformation led by COO Kevin Elsberry and Plant General Manager James Hinkle. Commenting on the journey, Elsberry said, “It’s been invigorating to see how quickly our team has embraced and applied the principles of LEAN thinking. We are seeing results of a true cultural shift every day in operational improvements, increased efficiency and industry-leading performance.” Remarking on the team’s rigor, Hinkle added, “I am proud of the team! They continually embody the cultural values and constantly challenge the status quo. It is great to be part of such a high-performance team!”

Adam Adelmann, EVP of Sales and Commercial Operations added, “We care about our customers. We are their champions, and it shows. With each operational barrier we remove, and with every new efficiency we gain, we are continually coming through for our customers and adding value for their brands around the world. Capstone is proud to be recognized once again as UMA’s Manufacturer of the Year. It reinforces our message that Capstone Nutrition is the right partner to deliver innovative, premium quality products for an extremely good value.”

About Capstone Nutrition
Capstone Nutrition is the leading pure play, turnkey developer and manufacturer of high quality nutrition. Capstone is a one stop shop for innovators in nutrition, bringing to bear the experience of dedicated scientists and trusted industry professionals. Since 1992, Capstone has been formulating, developing, manufacturing and packaging a wide range of capsules, tablets, and powders for customers throughout the globe. Headquartered at its state-of-the-art facility in Ogden, Utah, Capstone is known for exceptional quality and market-leading product development. The Company maintains the highest industry certifications recognizing its exceptional manufacturing standards, including Australia’s Therapeutic Goods Administration (“TGA”), NSF GMP, and NSF for Sport certification. For more information, please visit www.CapstoneNutrition.com.

MEDIA CONTACT:

Zach Kouwe/Doug Allen
Dukas Linden Public Relations
212-704-7385
brightstar@dlpr.com

M&A and the Family Business: Insights from Matthew Allard, Partner at Brightstar Capital Partners

At Brightstar Capital Partners, we invest in and partner with founder and family-owned businesses to help bring them to the next level. A vital element of our value-creation strategy is the broad industry expertise and leadership of our investment team and portfolio company partners.

Here, Brightstar Partner @Matthew Allard provides his insight into the role mergers and acquisitions (M&A) can play in a family business and the various issues that arise during transactions. Matt was recently invited to speak to business owners and others at the Family Business Alliance about this exact topic. Matt has over 25 years in the financial services and investment industry, including extensive experience in M&A. He currently serves as Vice Chairman of @QualTek and as a Board member of @Texas Water Supply Company, both Brightstar portfolio companies.


How can M&A help a family business?

On a fundamental level, M&A can help a business grow by acquiring new divisions, entering new geographic markets, or providing new services. Divesting underperforming business units or subsidiaries that no longer fit into the strategy of the overall company can also help free up cash and redeploy capital into areas that are more beneficial.

In a successful family business, family members often have different objectives with regards to monetizing their stake in the company versus reinvesting into the business. Think about it this way: as we go through a third-generation ownership and assume three children in each generation, the business will go from 3 to 9 to 27 stakeholders pretty quickly. And those 27 people can have different objectives and different ways in which they want to be involved with the company. Some may want to receive current income, some may want to fully monetize, some may want to invest. M&A is a way to satisfy those different interests.


When is the right time for you to think about M&A?

Anytime that you’re thinking about significant change in strategy, growth or liquidity is probably the right time to think about M&A. M&A is a very meaningful event in the life cycle of a business and it needs to be thoughtfully considered as do various inflection points.

If your business is growing organically and you’re developing new products and services on a consistent basis, M&A may not be necessary. It also might not be the right strategy if you have a full family shareholder base that’s in complete agreement on what the overall objectives of the business are.

But in those situations where there are differing opinions or new strategies and objectives, M&A can be an important tool to accomplish those goals.


How does a business prepare itself when it’s considering M&A, and what are the key criteria?

One critical thing you need to do right off the bat is look in the mirror. It’s common to place a lot of focus on the due diligence aspect of M&A, but before you start researching other businesses you have to take a thoughtful look at your own strategy, product lines, growth targets etc. Taking an inward review of your business as you start the process is key to informing what type of M&A strategy will create the most value.

Owners also must realize once you make a decision to embark on an M&A strategy, whether you are buying or selling, it’s typically a 9 to 12-month process. You have to identify either buyers or sellers, prepare yourself to buy or sell, conduct legal, accounting and operational reviews and hire advisors. Financing is also extremely important – how are you going to pay for a new business? Is it going to be personal funds, bank loans, or third-party capital? What is the structure of the financing?

Often times you hire advisors for each of those segments. It’s essential to make sure those advisors understand your goals, and that you develop a good rapport with them.


What are key trends that we’re seeing?

M&A trends often do follow the general health of the economy. Notwithstanding tariffs, and other global issues, we’ve been in a 10-year plus positive economic cycle. And we’ve seen similar trends on the M&A side – larger deal volumes, and importantly, higher valuations.

Average EBITDA multiples for comparable businesses have increased 30-40% from their low point in 2009 and 2010. Many deals were getting done at 8x trailing EBITDA 10 years ago, many of those deals are going for north of 10x or 12x EBITDA today.

At this moment the trends are positive. Nobody has a crystal ball for what things will look like in 6 or 12 months or even a few years down the road. But, generally in a healthy economy and with a high level of business confidence, folks look to M&A as a growth strategy and value creator.


How can a Private Equity firm be a good partner when it comes to M & A?

By bringing in a private equity partner, for either a majority or minority transaction, a family can simultaneously stay involved and continue to own and operate the business, take a cash dividend for themselves and diversify into other areas and grow the business. Private equity can also help if some family members want to disengage from the business, but also want to ensure it will carry on and continue to grow.

The key is building trust with the right private equity firm. They will be your long-term partners and they’re going to have members who will be on your Board of Directors. They have valuable insights and opinions. Some you may agree with, some you may not. Hopefully the end result will be a partnership that creates significant value – where you grow the business to make it bigger, more profitable, and ultimately more valuable.

Let me give you an example: Take a middle market company whose principal investor is in his late 60s and whose focus, like many family business owners, is on his preferred cash coupon. A private equity firm, alongside the company’s management, can purchase his stake, bring new capital into business, and embark on an M&A strategy that grows the company’s EBITDA significantly over time. In addition, a good private equity firm can introduce management to new customers, assist with operational efficiencies and help employ best practices as the company grows.

Ultimately M&A can be a very effective strategy to take a business to the next level and private equity can play a very significant role in that, especially in the middle market. The key is finding the right partners and building trust with the firms and people helping you throughout the process.

MEDIA CONTACT:

Zach Kouwe/Doug Allen
Dukas Linden Public Relations
212-704-7385

QualTek Expands Wireless Services Segment with Acquisition of Vinculums

Addition of Vinculums Provides Platform for Significant 5G Roll-out Service Offerings in Western United States

King of Prussia, PA, October 7, 2019 – QualTek, a Brightstar Capital Partners portfolio company that is a leading provider of turnkey telecommunications solutions, including engineering, installation, fulfillment and program management to the North American telecommunications and power sectors, announced today that it has completed the purchase of Vinculums Services, LLC (“Vinculums”). Terms of the transactions were not disclosed.

Vinculums, established in 2000 and based in Irvine, CA, is the leading infrastructure service provider for wireless operators throughout the Western United States. Vinculums specializes in program management, site acquisition, construction, transport, and small cell and DAS solutions.

“For close to two decades, Vinculums has been regarded as the premier Wireless Services Provider in the Western United States. Their performance, size and reputation for being on the forefront of wireless technology deployments is well known in the industry. This acquisition provides a tremendous platform for QualTek and Vinculums to significantly enhance the services that we provide for our mutual customers as we deploy new technology for the next decade and beyond,” said Scott Hisey, CEO of QualTek.

“We are very excited to join the QualTek team. Our dedicated employees have accomplished so much in our rich history of service to the telecommunications industry. We look forward to a very bright future with QualTek, leveraging our combined technology driven service platform to enhance the services we provide our customers,” said Paul Foster, CEO of Vinculums.

About QualTek
QualTek is one of the largest providers of turnkey services to the North American telecommunications, infrastructure and power industries. Through its 103 service locations and 6,000 dedicated professionals, QualTek provides its partners and clients with a range of services including engineering, installation, disaster recovery, project management, customer fulfilment, communications upgrades and infrastructure improvements. QualTek is a premier partner to some of the largest companies in the wireless, wireline and power sectors. For more information please visit www.qualtekservices.com.

About Vinculums
Based in Irvine, CA, Vinculums is a leading telecom infrastructure service provider for wireless operators throughout the western and southern United States. The company specializes in program management, site acquisition, site development, transport, and small cell and DAS solutions for major telecom carriers. For more information please visit www.vinculums.com.

MEDIA CONTACT:

Zach Kouwe/Doug Allen
Dukas Linden Public Relations
212-704-7385
brightstar@dlpr.com

Brightstar Capital Partners Completes Acquisition of Capstone Nutrition, a Leading Developer and Manufacturer of Nutrition Products

OGDEN, UT, September 23rd, 2019 – Private investment firm Brightstar Capital Partners (“Brightstar”), and leading developer and manufacturer of nutrition products Capstone Nutrition (“Capstone” or the “Company”), today announced the completion of the previously announced acquisition of Capstone. This acquisition was made in partnership with members of the Company’s senior management team.

“Capstone is a true innovator in the growing and fragmented health and wellness market,” said Gary Hokkanen, Brightstar Partner and Chairman of Capstone. “We are excited to support Capstone as it builds on its impressive reputation of offering best-in-class products and solutions to its customers.”

Jared Leishman, CEO of Capstone, said, “We are thrilled with the reaction from our customers and vendors since the announcement of our partnership with Brightstar. The Brightstar team’s expertise and resources will allow us to accelerate growth plans into new markets and products, and continue to be a one-stop shop for innovative nutrition solutions.”

Capstone entered into an agreement with Brightstar on August 30, 2019, and implementation of that agreement took effect today.

About Capstone Nutrition
Capstone is a provider of turnkey services from concept to blending, manufacturing, and packaging of solid dose products (e.g. tablets and capsules) and powders. Additionally, the Company is an R&D leader in the vitamin, mineral, and supplement category, developing more than 275 new or enhanced products annually. Capstone is fully certified for cGMP, NSF, NSF Sport, and Australia’s Therapeutic Goods Administration (TGA), as well as Halal and Kosher products. For more information, please visit www.capstonenutrition.com.

About Brightstar Capital Partners
Brightstar Capital Partners is a private equity firm focused on investing in closely-held companies. Brightstar seeks partnership opportunities with exceptional management teams where it is uniquely positioned to drive value creation. Brightstar seeks control investments and employs an operationally intensive approach to investing that leverages its extensive experience and relationship network. For more information please visit www.brightstarcapitalpartners.com.

MEDIA CONTACT:

Zach Kouwe/Doug Allen
Dukas Linden Public Relations
212-704-7385
brightstar@dlpr.com

Brightstar Capital Partners to Acquire Capstone Nutrition, a Leading Developer and Manufacturer of Nutrition Products

New capital will allow Capstone to continue to grow its best-in-class platform in a fragmented sector

OGDEN, UT, September 3rd, 2019 – Brightstar Capital Partners (“Brightstar”), a private investment firm that partners with closely-held, middle market companies, announced today it has signed a definitive agreement to acquire Capstone Nutrition (“Capstone” or the “Company”), in partnership with members of its senior leadership team.

Founded in 1989 and headquartered in Ogden, Utah, Capstone is a leading developer and manufacturer of high-quality nutrition products. The Company lives up to its “Life Improved” motto, using a state-of-the-art 300,000 square foot facility to produce a wide range of vitamins, minerals, nutrition, anti-aging, and general wellness products. Capstone’s diverse customer base includes global marketers, consumer brands, health food and specialty retail outlets, as well as online and mass-market retailers.

“Capstone is a top-tier platform in a fragmented and rapidly growing segment of the health and wellness market,” said Gary Hokkanen, Brightstar Partner and incoming Chairman of Capstone. “The Company has a 30-year history of making health-oriented products for a variety of customers in the United States and internationally, and we are eager to apply our operational experience and expertise to help the business thrive.”

“The Capstone team is delighted to be partnering with Brightstar to help us maximize our growth potential,” said Jared Leishman, CEO of Capstone. “Their experienced team adds new capabilities and resources to further our success and allow us to grow into new markets and products.”

“I’ve worked with entrepreneurs, families and founders of Utah businesses since my time at BYU, and I know Gary’s decades of leadership and his core values will feel right at home in Utah,” said Roger Bulloch, Brightstar Partner and incoming Vice-Chairman of Capstone. “We’ve seen Capstone’s rapid growth and have conviction in the Company’s leadership, innovative products, and long-term growth model within its key markets and beyond.”

About Capstone Nutrition
Capstone is a provider of turnkey services from concept to blending, manufacturing, and packaging of solid dose products (e.g. tablets and capsules) and powders. Additionally, the Company is an R&D leader in the vitamin, mineral, and dietary supplement category, developing more than 275 new or enhanced products in a given year. Capstone is fully certified for cGMP, NSF, NSF Sport, and Australia’s Therapeutic Goods Administration (TGA), as well as Halal and Kosher products. For more information, please visit www.capstonenutrition.com.

About Brightstar Capital Partners
Brightstar Capital Partners is a private equity firm focused on investing in closely-held companies. Brightstar seeks partnership opportunities with exceptional management teams where it is uniquely positioned to drive value creation. Brightstar seeks control investments and employs an operationally intensive approach to investing that leverages its extensive experience and relationship network. For more information please visit www.brightstarcapitalpartners.com.

MEDIA CONTACT:

Zach Kouwe/Doug Allen
Dukas Linden Public Relations
212-704-7385
brightstar@dlpr.com

Electronics and the Circular Economy: A Conversation with Jeff Zeigler and Tom Meredith, Partner at Brightstar Capital Partners

August 20, 2019

At Brightstar Capital Partners, we have a sharp focus on investing in and growing the value of middle market companies. A vital element of our value-creation model is the broad industry expertise and leadership of our investment team and portfolio company partners.

Here, two of Brightstar’s team members provide their insight into the rapidly growing “circular economy” for the reclamation and repurposing of electronic devices, and explain how this can create economic value and support environmental stewardship. Tom Meredith is a Partner at Brightstar and is Chairman of Global Resale, a portfolio company that is a leader in reverse logistics services for the telecom and electronics sectors. Earlier, Tom held senior positions at Dell, Sun Microsystems and Amdahl Capital Corporation. Jeff Zeigler is the Founder, CEO and a Director of Global Resale, and has nearly 20 years of experience in the resale and reverse logistics space. He founded TechTurn in 1999 and led the business up to and following its acquisition by Arrow Electronics. Brightstar Capital Partners closed its acquisition on Global Resale in 2016.


  1. What is the circular economy as it relates to electronics and digital technology?

In the circular economy, products such as electronic devices are recaptured, refurbished or recycled, so the products or their individual components can be put back into productive use. This extends the useful life of devices and component materials, helps keep hazardous materials out of the environment, and has the potential to reduce the cost of digital technology. Because this approach dramatically reduces waste by putting devices back into use, it is a more “green” solution than electronic recycling alone, which can involve significant amounts of energy usage.


  1. Why is the circular economy increasingly relevant today; why are people and businesses paying more attention to it now?

To understand why the circular economy is increasing in importance, we only have to look at the explosive growth of electronic devices around the world. The affordability of and access to consumer electronics, the rise of digital technology in business, and the expanding adoption of the Internet of Things (IoT) have led to a vast proliferation of electronic devices. By some estimates, the world may have as many as 50 billion connected devices by 2020.

Unfortunately, the growth in electronic devices is causing a dramatic increase in e-waste, which is now the fastest growing waste stream in the world. Experts project the e-waste stream to reach 52.2 million metric tons by 2021. The problem isn’t only the volume of e-waste, but also the nature of the materials, which can include toxic substances like lead, mercury, arsenic, cadmium, copper, beryllium, barium or chromium. As a result, globally we are seeing increased regulation of this issue, with many jurisdictions mandating electronics recycling.


  1. Isn’t there also a strong business case for participating in the circular economy for electronic devices?

Absolutely. There is enormous economic value in used electronic devices. The worldwide market for refurbished phones represents estimated wholesale revenue of around $14 billion, and that doesn’t include other consumer devices or corporate technology. There is also considerable economic value in recovering precious metals and other materials in e-waste, such as gold, silver, copper, platinum, and palladium. Overall, the World Economic Forum estimates the value of e-waste at $62.5 billion annually – and growing.

Disposing of used electronics also has an intangible cost, in terms of the extensive corporate and personal data stored on these devices. Without responsible refurbishment and reuse of these devices, vast amounts of data are left exposed.

Global Resale’s business model was built around the tremendous opportunity that exists in the circular economy. We partner with manufacturers, wireless carriers, retailers, resellers, leasing companies, and large corporate accounts to create a global network to reclaim and refurbish devices, sanitize data, and return products, components or materials to the global supply chain.

We have demonstrated that participating in the circular economy for electronics is not only the right thing to do from an environmental perspective. It also creates tremendous economic value and, by enabling smaller businesses and less developed nations to access repurposed devices, helps extend the benefits of the digital revolution to more participants.


  1. What does it take to become a global leader in the circular economy?

It’s vital to invest in the necessary infrastructure, systems and processes in order to be a trusted, reliable partner for major manufacturers, wireless carriers, retailers and other market participants. Industry leadership requires the ability to work across a complex value chain to handle all aspects of reverse logistics, including collection, data sanitization, reconditioning, components and materials harvesting, and resale in an efficient and responsible manner. Investments in data security, compliance with international regulatory standards, and financial management are also essential.

We also believe that playing a leadership role in the circular economy means being at the forefront of efforts to promote strong industry standards for environmentally responsible recycling. Senior executives of Global Resale were instrumental in the creation of the R2 Standard, the industry-wide certification program for electronics recyclers that agree to meet stringent environmental health and safety requirements. The adoption of the R2 Standard, and related cooperative efforts by the industry, have helped promote sound, uniform recycling practices around the world, and we are continuing to work to rewrite the Standard to make it even more effective.


  1. What’s next; how do you see the circular economy evolving?

Even with the huge number of devices in use today, the circular economy for electronics is still in its infancy and has tremendous growth potential. Just as Uber or Airbnb provide ways for many users to share a vehicle or a home, the circular economy will enable businesses to find new users for older technology – which optimizes use, increases affordability, and minimizes impact on the environment.

Developments such as the adoption of 5G, and the ongoing shift of corporate functions to the cloud, will accelerate the introduction of new devices and the phase-out of older models. We expect the largest growth in the addressable market will be in corporate data center equipment, mobile devices, and technology related to the IoT.

Environmental concerns also will drive the growth of the circular economy. The largest regional producers of e-waste are North America and Western Europe, while the largest recipients are China, Brazil, Mexico, Eastern Europe and parts of Africa. International regulations simply won’t tolerate this dumping over the long term, and we will see more enforcement of collection and electronic recycling.

The circular economy will continue to evolve and grow through deepening levels of trust and cooperation in the industry, as all participants in the chain come to trust the value proposition the circular economy provides. Device manufacturers must recognize that the secondary market won’t cannibalize their existing business, and they must make products that are optimized for long-term durability. Similarly, customers must be able to trust that their data will be purged and handled properly, and also must trust that the refurbished products will be useful and of high quality. The standards and certifications in place provide a solid basis for this deep level of trust throughout the industry, and maintaining industry focus and cooperation will help drive this forward.

At Global Resale, we will continue making investments to be a more valuable partner. We believe a relentless commitment to quality and customer service will help drive an unmatched customer experience and help create a strong industry-leading brand that our partners can know and trust. We will grow our global network and expand our range of services, such as providing analytics and other innovations to manufacturers, to make the secondary market a clear “win-win” for all participants. As we continue to invest in our system, the circular economy will become more attractive to a greater range of technology providers and end-users.

MEDIA CONTACT:

Zach Kouwe/Doug Allen
Dukas Linden Public Relations
212-704-7385
brightstar@dlpr.com

5G is the Greatest Infrastructure Project in U.S. History

By Dr. Raul Deju, Partner, Brightstar Capital Partners and Board Member, QualTek

August 7, 2019

Are you watching the growth in data transmission and connectivity in America? Well here are some facts that will give you an idea of the unprecedented consumer demand in wireless and how this is impacting your life and will impact you even more in the future.

As we reach the 10-year mark from 2010 to 2020, wireless use has grown at an unprecedented pace. In 2010 reported wireless data traffic was 388 billion megabytes, by the end of 2018 that grew to 28.5 trillion megabytes, a 75-fold growth. By the end of 2020 the data traffic should exceed 40 trillion megabytes.

Today there are nearly 1.3 mobile phone devices for each of us in America, and this does not include the data-only devices like smart watches, health monitoring devices and a myriad of equipment that is directly connected through a wireless network. It is conservatively estimated that there are more than 150 million data-only devices connected in the U.S. today.

Of course this growth in connectivity is not without a need of capital investment. Since the launch of the 4G program in 2010 and now into the beginning of the 5G effort, industry in the U.S. has invested well over a quarter of a trillion dollars in capital to develop the capacity and the coverage of America’s wireless networks, while also upgrading the technology needed to support 5G. This is certainly one of the largest infrastructure development programs ever in the history of the world. In fact, by comparison the U.S. spent $130 billion over 40 years in building the 43,000 miles of the National Highway System that crosses our nation, about half what industry has already spent in getting to 5G – and we are not there yet.

To date there are more than 350,000 cell sites in America. When you look at the portion of the U.S. that is inhabited (47% of the total land mass) that translates to 1 cell site for each 5 square miles. Translation – there is an enormous growth yet to come!

5G is the greatest infrastructure project ever in America. As we noted earlier, its impact will far exceed the National Highway System and the national electrification effort in prior decades. In addition, 5G is one of the major engines of today’s economic growth. Beginning with the band-spectrum licenses, 5G has contributed $116 billion dollars directly to the US Treasury and over the next 5 years can likely contribute an additional $400 billion. At the rate of growth of the 5G effort we will, over the next decade, create more than three million directly-connected American jobs. This infrastructure thrust also will add between ½ and ¾ of a trillion dollars to our nation’s GDP.

5G is also very important in new things like autonomous cars (self-driving). The current 4G network is only fast enough to online stream full HD content, play games and carry on some basic online functions but not fast enough for millions of fully autonomous cars to be driven in the US every minute of the day (Note: Autonomous cars do not need to be connected to the internet to drive, the internet is just used for downloads). Nonetheless, partly autonomous cars are here today and some fully autonomous cars are on the roads, but without 5G a full realization of this feature nationwide is not yet possible. Of course, there are developments in artificial intelligence and ultra-fast machine decision logic that are also happening and should definitely turn fully autonomous cars into reality in the near future.

You can see 5G is one of the most significant efforts you will see in your lifetime. It is transforming the way we live, move, and think and it opens up worldwide collaboration. It makes many unthinkable opportunities possible while creating many high paying jobs in America.

Data used in this piece comes from many private and public sources all deemed reliable. Information has been cross checked and peer reviewed.

MEDIA CONTACT:

Zach Kouwe/Doug Allen
Dukas Linden Public Relations
212-704-7385
brightstar@dlpr.com

Brightstar Capital Partners Forms InfraServ US, LLC to Acquire Gateway Bobcat, LLC in Partnership with Existing Ownership and Management

New Capital Will Facilitate Growth in Consolidating, Fragmented Industry

ST. LOUIS, MO, June. 19, 2019 – Brightstar Capital Partners (“Brightstar”), a private investment firm that partners with closely held, family-owned middle market companies, today announced the acquisition of Gateway Bobcat, LLC (“Gateway Bobcat” or the “Company”), in partnership with Gateway Bobcat’s Founder and CEO Dan Anich, President Mike Allen, and members of its leadership team. The transaction is the first through Brightstar’s newly-formed company, InfraServ US, LLC, which will serve as an industrial equipment dealership and services platform.

Headquartered in St. Louis, Missouri, Gateway Bobcat is a provider of Bobcat® and Doosan®-branded industrial equipment, and has grown rapidly from a single dealership in 1990 to 11 locations across Missouri, Illinois, Indiana, Kentucky, and Tennessee. In addition to serving as a dealer of new and used equipment, Gateway Bobcat maintains a rental fleet as well as a significant parts and services offering.

“Gateway Bobcat has been extremely adept at building meaningful scale in the fragmented industrial equipment and services industry,” said Andrew Weinberg, Managing Partner and CEO of Brightstar. “Gateway Bobcat is the centerpiece of our plans to build an industrial equipment dealership and services platform through InfraServ US.”

“The Gateway Bobcat team is delighted to be partnering with Brightstar to help realize our potential for growth,” said Dan Anich, the Company’s Founder and CEO. “Brightstar will bring additional investment capital into the Company, as well as a proven track record of supporting enterprising businesses through strategic thinking, talent development, and operational, financial and transactional expertise.”

“We are excited by the opportunity to invest in the further success of this dynamic entrepreneurial business, whose management team has shown its ability to grow both organically and through consolidation, to build solid relationships with customers and its major OEM supplier, and to create systems and processes needed to support a scalable business,” said Joseph Bartek, Managing Director of Brightstar.

“We look forward to a bright future as we work together to build on Gateway Bobcat’s leadership in the industrial equipment marketplace,” said Mike Allen, President of Gateway Bobcat

About Gateway Bobcat, LLC and InfraServ US, LLC
Gateway Bobcat, LLC, founded in 1990 and based in St. Louis, operates principally as a provider of Bobcat® and Doosan®-branded industrial equipment sales, parts and service, and rental services across its footprint of 11 dealership locations spanning Missouri, Illinois, Indiana, Kentucky, and Tennessee. InfraServ US, LLC was created to facilitate the growth of the industrial services dealership business and serve as a platform company for future investments. For more information please visit www.bobcatofstl.com.

About Brightstar Capital Partners
Brightstar Capital Partners is a private equity firm focused on investing in closely-held companies. Brightstar seeks partnership opportunities with exceptional management teams where it is uniquely positioned to drive value creation. Brightstar seeks control investments and employs an operationally intensive approach to investing that leverages its extensive experience and relationship network. For more information please visit www.brightstarcapitalpartners.com.

MEDIA CONTACT:

Zach Kouwe/Shree Dhond
Dukas Linden Public Relations
212-704-7385
brightstar@dlpr.com

Investing in Water Infrastructure Development: A Conversation with Raul A. Deju, Partner at Brightstar Capital Partners

At Brightstar Capital Partners, we have a sharp focus on investing in and growing the value of middle market companies. A vital element of our value-creation model is the industry expertise that our roster of Senior Partners brings to our investment process and our portfolio companies.

One of our Partners, Raul A. Deju, is the Chairman of Texas Water Supply Company, a Brightstar portfolio company that brings water to the fast-growing Texas Hill Country. Raul is also a Ph.D. Hydrologist graduate from the New Mexico Institute of Technology, and author of seven books including “Regional Hydrology Fundamentals”, “The Environment and its Resources”, and “A Planet in Conflict.” Below, I ask Raul to give his perspective on how private capital can help forge a sustainable future in water development.


  1. What is the present state of America’s water sources and systems and what are the key factors that will drive growth in environmentally conscious water infrastructure development in the US?

Americans are the world’s largest per-capita users of water. We use about 3 times as much water as an average European consumer and 6 times as much as an average Chinese consumer. Our water needs are served by a patchwork of over 50,000 public and private water systems, leading to fragmented and sometimes inconsistent water management. Even with all that demand, our average cost of water can be as low as pennies per gallon. So we place very heavy demands on our water infrastructure, but we don’t have consistent management policies or sufficient resources to invest in the proper maintenance and expansion of that infrastructure.

Forty percent of America’s water infrastructure is over 40 years old. As our population grows toward 400 million by 2050, supplying water represents both a public challenge and a private sector investment opportunity. Estimates indicate that to just rehabilitate the existing US water supply/treatment and delivery infrastructure will require in excess of $1 trillion over the next decade – and to improve the systems to best-in-class level would take well over $3 trillion.

Fortunately, our society is starting to value water as it should be valued, which creates a good climate for investment. People in urban areas are demanding the availability of good quality water and are willing to pay higher prices. In the past nine years the average price of water in the US has increased over 50% and such increases are likely to continue in the immediate future.

The global debate around climate change also has raised awareness of the topic of investment in water. Given the need to conserve water, many local systems are educating consumers about water-saving practices. Water systems across the country are also increasing the price of water to fund improvements to make their infrastructure more efficient and reliable.


  1. Why is private equity an appropriate vehicle for investment in water infrastructure? What can private capital do that public resources cannot do as well?

Federal and state governments generally play a small role in water investing. Opportunities for investments in water have expanded as local governments run short of cash and must turn to the private sector to fund upgrades, run local systems and meet environmental standards. Also, consolidation in the industry is accelerating.

Private equity firms have the capital to invest in infrastructure – along with deep expertise in consolidating and turning around businesses – so they’re well-positioned to help our American water systems achieve greater efficiency.

At the same time, water infrastructure is an attractive vehicle for pension funds and other investors who are seeking alternative investments that avoid the volatility of equity markets while providing greater yields than bonds. Demand for sustainable sources of quality water is growing, the price keeps improving, and there is expertise in the private equity space to create value through water investments.


  1. What are the most attractive areas for water investment: supply, distribution, treatment, client services, etc.?

Many fund managers now see the water space as an investment opportunity for the long-term on an essential commodity that is scarce in many regions.

For example, there are opportunities – especially in water-short areas where population is rapidly growing – to buy thousands of acres of land with viable water rights, aquifers, surface water access, and even small private water utilities that have been neglected. Opportunities also exist to invest in the efficient extraction of water from aquifers, the efficient use of surface waters, desalination, and even the re-use of treated water. Another opportunity is the consolidation of small water systems with large ones to create a larger company that can better deliver needed services. Or, one can invest in the infrastructure companies needed to repair and replace the current crumbling system and upgrade obsolete technologies.


  1. How are investors building scale in water infrastructure?

Investors are increasingly consolidating a myriad of water companies – many of which are really too small to operate effectively. These investors are finding it profitable to acquire a small water system that can become the “anchor” for combining other small units into a bigger structure, which can then be upgraded.

Other investors are agglomerating water supply sources in fast-growing metro areas and selling very long term supply contracts to producing entities that are becoming water-short because of the rapid growth in their area of service.


  1. What attributes must be present in a specific region or metro area (demographics, economic growth, public agency structure, etc.) to make it an attractive place to invest in its water development?

The best target areas for investment in water are those smaller systems that cannot meet the needs of their users, in areas where demographic growth and industrial use growth warrant price increases to pay back the investments needed to modernize existing water systems.

Economic development assistance and good working relations with regulatory bodies are also a must. The public and private sectors must collaborate to turn around our rapidly deteriorating water infrastructure – to make peoples’ lives better and increase the growth potential of our communities. There are things the private sector can do better, cheaper, and faster than the public sector, while the public sector can do some things that the private sector cannot. Through the right partnership, we can achieve success more effectively, faster and at the lowest cost to consumers. The private sector can create better service to customers with upgraded systems that are also operated in an environmentally friendly manner.

MEDIA CONTACT:

Zach Kouwe/Doug Allen
Dukas Linden Public Relations
212-704-7385

The Middle Market: Where Shared Prosperity Deserves Cultivation

By Andrew S. Weinberg, Founder, Managing Partner & CEO, Brightstar Capital Partners

For the 2019 Milken Institute Global Conference, we asked speakers to consider what prosperity means. See their insights and share your thoughts using #MIGlobal. See more coverage on the Milken Institute LinkedIn page. This article originally appeared in the #PowerofIdeas. See the entire POI series.

More than ever, the business headlines and social media chatter seem to be dominated by the nation’s largest companies and biggest brands. From Elon Musk’s tweets, Levi’s IPO, and Disney’s acquisition of Fox, the big corporate powerhouses dominate our attention. To be sure, these companies have a sizable impact on the economy and are perceived to be the leaders when it comes to product innovation and corporate stewardship. But what is often overlooked is how important businesses in the middle market are to ensuring the prosperity we have experienced over the last 30 years is shared by as many as possible.

Big brands certainly move the markets, but we need to remember that the middle market (defined as companies with revenues between $10 million and $1 billion) accounts for more than one-third the nation’s GDP and total employment, according to the National Center for the Middle Market. They are also responsible for 60 percent of new jobs in the private sector. Employment at middle-market companies grew by 5.4 percent last year alone.

As private equity investors in founder-led and family-owned middle-market companies, we play a role in helping this under-recognized part of the economy thrive. A significant part of that role involves thinking carefully about how we can add value to a business not just by increasing the top line and bottom line but also by collaborating with management to plan for the long term by adopting and improving on the best global business practices. We see opportunity partnering with middle-market companies to move to the next level of social and corporate responsibility—focusing on all stakeholders, including the communities they operate in and the institutions that support them.

What is more, we’ve found that these businesses, especially ones that are family owned, are eager partners in ensuring their prosperity is shared by everyone. As we have evaluated hundreds of middle-market businesses over the years, we see a very real desire to invest heavily in innovation and disruption. In fact, with careful cultivation, these companies are in a unique position to more nimbly adopt progressive business practices or address societal inequalities through corporate initiatives. That results in prosperity not only for our investors and partners but also for employees, other stakeholders, and the surrounding community.

According to the US Chamber of Commerce Foundation, middle-market companies are the “life blood” of Corporate Social Responsibility (CSR). We cannot have shared prosperity without focusing more on these companies, as they tend to have a greater direct effect on the communities in which they operate and on individual employees and other stakeholders. Many middle-market companies are still family owned, with strong cultures and shared values that have led to both business success and community engagement. Part of our job as investors and partners is to make sure those values are preserved as we help take the company to the next level of growth.

A closer look at the corporate behavior of middle-market companies shows very encouraging signs. A recent report created by the RSM US Middle Market Business Index, in conjunction with Moody’s Analytics and the US Chamber of Commerce, found that 90 percent of middle-market companies are engaged in some form of CSR. These companies invest broadly in community organizations, education, children and youth issues, and other areas to support the prosperity of their local communities, combat inequalities, and improve their business environment. The same report found that 88 percent of middle-market companies are focused on diversity and inclusion, indicating a commitment to equitable business models and inclusive growth as well.

It is clear that businesses in the middle market are poised to employ ever progressive business practices in the future, but we, as stewards of capital, can play a significant role in helping them advance the prosperity of their communities and remain focused on the long term. In turn, these businesses will attract the next generation of business leaders, to whom a professional commitment to the well-being of society as a whole is increasingly important.

While the nation’s largest companies are vitally important to the economy, thought leaders, institutions, and investors shouldn’t ignore the importance of smaller companies in shaping our shared prosperity. With the right attention and support, we will only see the middle market grow as an economic force, as well as a source of innovation and a driver of shared prosperity.

MEDIA CONTACT:

Zach Kouwe/Doug Allen
Dukas Linden Public Relations
212-704-7385
brightstar@dlpr.com