CHS Completes Majority Equity Investment in SunSource
Code Hennessy & Simmons LLC (“CHS”) announced today that it has made a majority equity investment in STS Operating, Inc. (“SunSource”), the largest independent distributor of fluid power products and systems in the United States. The former majority owner, Allied Capital Corporation (“Allied Capital”), will continue working with SunSource as the company's subordinated debt lender.
Through 34 locations nationwide, SunSource distributes 100,000 unique hydraulic, pneumatic, motion control and filtration products manufactured by over 300 leading vendors to more than 17,000 customers. SunSource also provides complementary value-added services including the engineering and design of fluid power systems for original equipment manufacturers, assembly and repair services and technical training.
“SunSource represents an excellent opportunity for CHS to leverage our experience as an investor in distribution businesses,” said David Hawkins, Partner at CHS. “The company demonstrates characteristics of our most successful distribution investments: a competitive product line with thousands of SKUs; relationships with a large customer base in diversified end markets; long-term partnerships with leading manufacturers; broad geographic reach with 34 locations nationwide; differentiation through value-added service offerings; and a capable management team with a track record of executing successful acquisitions. We look forward to working with Justin Jacobi, the entire SunSource team and Allied Capital to extend the company's record of success.”
Justin Jacobi, CEO of SunSource, said, “We look forward to working with our new partners at CHS as well as continuing our relationship with Allied Capital as we position our company for its next phase of growth. We are particularly excited about CHS' track record in the distribution arena. Being able to tap into both CHS' experience as well as the executive teams at their other distribution portfolio companies gives SunSource a significant competitive advantage.”
The investment in SunSource complements CHS' portfolio of investments in the distribution industry, which currently includes Beacon Roofing Supply, Inc. (Nasdaq: BECN), a leading distributor of residential and commercial roofing products; The Hillman Group, a leading distributor of fasteners, key blanks, signage and other small hardware components; Hoboken Wood Flooring Corporation, a leading distributor of hard surface flooring; Home Acres Building Supply Co., a leading distributor of gypsum wallboard in the Upper Midwest; and Houston Wire & Cable Company (Nasdaq: HWCC), the largest U.S. distributor of specialty wire and cable.
CHS is a Chicago-based private equity firm specializing in private equity investments and recapitalizations of middle market companies in partnership with management. CHS has formed five private equity funds and currently manages over $2.5 billion of capital. Funds for CHS' investment in SunSource came from CHS Private Equity V LP, a $1.3 billion investment fund formed in 2005.
For more information on SunSource, please refer to the company's website at www.sun-source.com.