Riverside and Investcorp sell Arrowhead Engineered Products to Genstar Capital

The Riverside Company (Riverside), a global private investor focused on the smaller end of the middle market, and Investcorp, a global provider and manager of alternative investment products, have sold Arrowhead Engineered Products (AEP) to Genstar, a private equity firm focused on investments in targeted segments of the financial services, healthcare, industrials and software industries. 

Specific terms of the transaction have not been disclosed.

Founded in 1985, AEP is a leading global engineer and omni-channel distributor of non-discretionary, proprietary-branded, aftermarket replacement parts for outdoor power equipment, powersports, specialty vehicles, agriculture and other diverse end markets. AEP leverages data and digital capabilities to design and engineer more than 10,000 new SKUs per year using a diverse global supplier base to provide the highest quality aftermarket replacement parts to end users. Through its strategic distribution footprint across North America and Europe, AEP delivers more than 380,000 SKUs through dealers, distributors, retailers, repair shops and e-commerce channels.

Riverside acquired a majority investment in AEP in 2015 and Investcorp subsequently acquired a significant minority stake in AEP in 2016 alongside the firm. Partnering with management, Riverside and Investcorp focused on several value creation initiatives that resulted in over 5x revenue growth of the platform.

“We are proud of what we have accomplished with AEP management during our successful partnership,” says Riverside Co-Chief Investment Officer (RCAF) Brad Roberts. “With AEP, we identified an opportunity to invest in a differentiated platform with exposure to attractive end markets and accelerated growth through organic and inorganic initiatives. During our investment period, and working closely with management and the Investcorp team, we exponentially grew AEP’s eCommerce presence, expanded its international footprint, enhanced the sales and marketing organisations and entered new end markets.”

“Riverside and Investcorp were great investment partners that worked alongside us to expand the platform while significantly investing in our management team and infrastructure to position us for long-term growth,” says AEP CEO John Mosunic.

AEP is another example of Riverside’s commitment to investing in the Specialty Manufacturing & Distribution industry. To date, the firm has invested in more than 250 specialty manufacturing and value-added distribution companies globally across a wide variety of end markets. Investcorp has a long history of investing across Specialty Distribution sectors through several platform investments.

“Together with Riverside, John and the management team at AEP, we have significantly expanded and strengthened the platform to better serve customers in the off-road end markets space in North America and Europe,” says Investcorp Managing Director, Private Equity – North America, Steve Miller. “We believe the company is well-positioned for further growth and look forward to its continued success.”

Rob S Rutledge, Managing Director at Genstar Capital, says: “Our history of investing in industrial aftermarket businesses led us to Arrowhead, which we have been tracking for several years.  The company operates in several highly attractive and growing end markets and offers a broad product portfolio from its global footprint. The team has built an impressive business delivering differentiated products and service to its customers across end markets.”

Mosunic says: “We look forward to working with our new partners at Genstar. They have significant experience creating growth with companies like Arrowhead. There is tremendous runway for us to continue expanding our quality aftermarket product offering. Listening to our customers is key for the rapid development and commercialisation of new products that help advance our brand and relationships across existing and new markets.”

Working with Roberts on the deal for Riverside were Principal Daniel Grinnan, Associate Abeer Irfan, Operating Partner Steve Stubitz and Operating Finance Executive Rob Carraway. Senior Partner Anne Hayes led the capital markets initiatives throughout the investment period. The Investcorp deal team included Head of Private Equity – North America, David Tayeh, Managing Director Steve Miller, Managing Director Mike Emmet, Principal Raj Sheth and Vice President Jiachang Xiang.

Jefferies, Baird, Jones Day and Alvarez & Marsal advised Riverside, Investcorp and AEP on this transaction.

Weil, Gotshal & Manges served as legal counsel to Genstar in the transaction.
 

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