Compass Group Looking at First Area Investment
By RAJIV VYAS
Private equity investor The Compass Group International LLC could be near its first Southern California investment since opening an Irvine office earlier this year, principal Elias Sabo said.
Westport, Conn.-based Compass is looking at investing in an unnamed food processing company, Sabo said.
The firm would invest around $8 million and pick up a majority stake in the company, he said.
Compass opened its Irvine office in March.
“We are thrilled that we came here,” said David Browne, a Compass vice president. “This is a particularly interesting place to look at private equity.”
Browne and Sabo moved here from Connecticut to start up the OC office.
They came west because of the number of light manufacturing companies in OC and California, they said.
Compass invests in basic industries. It prefers companies in manufacturing, distribution and business services, where technology doesn’t grow out of date too quickly.
The Irvine office gets about five prospective deals a week, Sabo said. Of those, two companies may meet the firm’s criteria, he said.
Compass is a relatively new private equity firm.
It formed in 1997 and has $250 million under management.
Nearly half of the firm’s managed funds are in six companies, two on the East Coast, three in the Midwest and one on the West Coast.
The fund has one limited partner providing money to invest,The Teekay Found-ation, which was started by the founder of Teekay Shipping Corp. The foundation owns Oceanic Bank and Trust Ltd. of the Bahamas.
Compass invests in companies for five to seven years, vs. the industry norm of three years to five years, Sabo said.
“We have a single sponsor that is very patient,” he said.
Like Los Angeles-based Riordan, Lewis & Haden and Newport Beach-based ClearLight Partners LLC, Compass invests in privately held profitable companies.
It invests $4 million to $20 million in each of its portfolio companies, similar to Riordan, Lewis and ClearLight.
Compass likes to take a majority stake in its portfolio companies. Board members at portfolio companies are handpicked by the firm’s partners.
One company Compass has invested in is Waterloo, Iowa-based California Pellet Mill Co. In 2001, Compass bought the assets of the maker of pelletizing gear for animal feed.
Another portfolio company is Cincinnati-based CBS Personnel Services LLC, a human resources manager with more than $300 million in yearly sales.
