Pacific Avenue Capital Partners, LLC ("Pacific Avenue"), a Los Angeles-based private investment firm focused on complex situations in the middle market, announced that it has raised new capital to purchase Emerald Textiles ("Emerald" or the "Company"), the leading provider of fully outsourced healthcare linen management services in the Western United States, from existing limited partner investors through a continuation vehicle. The transaction and Pacific Avenue's continued involvement position Emerald to take advantage of significant market opportunities, while also providing liquidity for the original limited partners. The vehicle is funded by a group of leading institutional investors including Glendower Capital, funds and accounts managed by BlackRock Private Equity Partners, DWS Private Equity, Allstate Investments, CH Investment Partners, and other blue-chip investors. Furthermore, the transaction includes a significant investment from the Emerald management team and Pacific Avenue.
The transaction includes more than $200 million of committed equity capital to support the Company's next phase of growth and to buy out certain limited partners. The transaction also includes a refinancing of the Company's existing credit facilities with funds managed by the Credit Group of Ares Management Corporation providing a unitranche solution and Wells Fargo Capital Finance providing an ABL revolver.
"Pacific Avenue, alongside the Emerald team, have transformed the linen services landscape in the Western United States. The continuation vehicle represents our continued focus building a world-class healthcare linen provider that serves the market," said Chris Sznewajs, Founder and Managing Partner of Pacific Avenue. "We are thankful for the partnership of our equity partners and their support validates Pacific Avenue's disciplined investment approach."
Emerald is the leading provider of outsourced linen management services and specialty products to hospitals, clinics, and other healthcare facilities in the Western United States. The Company provides a full suite of products encompassing traditional linens and add-ons (e.g., mops, mats, scrubs, and isolation gowns), and is committed to providing the best value-proposition to customers through the highest quality and service. The Company has experienced impressive growth and a significant overall transformation through add-on acquisitions, greenfield expansion, large customer wins, and meaningful operational improvements. Today, Emerald operates six modern processing facilities and two distribution centers across California, Nevada, and Utah, serving over 750 customer sites.
"This is an exciting day for our Company, employees, supply partners, and customer partners. We have invested heavily in facilities and state-of-the-art equipment and have achieved incredible growth in partnership with Chris and the team over the past four years," said Andy Kratky, Chief Executive Officer of Emerald. "The continuation vehicle allows us to leveraging what we have done well and accelerate our investment plans to serve and provide value to all of our partners. Our deep commitment to customer service, superior cleanliness, resource preservation, and safety have established Emerald as the leading provider of outsourced linen management services in the Western United States."
The funding from the dedicated vehicle provides Emerald with access to additional equity capital that will enable the Company to aggressively pursue its organic growth strategy as well as continue its successful acquisition strategy. As part of this transaction, Ocean Avenue Capital Partners ("Ocean Avenue"), a limited partner in the original Emerald transaction, exited its investment in Emerald.
"Pacific Avenue has been an excellent partner on our investment in Emerald," said Jacques Youssefmir, a Founding Partner at Ocean Avenue. "Chris Sznewajs and the team mapped out an aggressive strategy to build the premier healthcare linen provider in the Western United States through organic growth and synergistic M&A. They, along with Greg Anderson (founder of the original platform company) and the Emerald management team, executed on the plan to create a world-class platform. We are very pleased with the outcome of our investment, and wish Pacific Avenue and the Emerald team continued success in executing on their plan."
Jones Day served as M&A legal and debt counsel to Pacific Avenue. Weil, Gotshal & Manges LLP is serving as counsel for the continuation fund. Piper Sandler & Co. and Stephens Inc. advised on the private debt financing. UBS Investment Bank acted as the exclusive placement agent for the equity financing. Pacific Avenue will act as the general partner of the single asset vehicle.
About Pacific Avenue Capital Partners
Pacific Avenue Capital Partners, founded by Chris Sznewajs in 2017, is a Los Angeles-based private investment firm focused on corporate divestitures and other complex situations in the middle market. Pacific Avenue has extensive M&A and operations experience allowing the firm to navigate complex transactions and unlock value through operational improvement, capital investment, and accelerated growth. The Pacific Avenue portfolio exceeds more than $800 million in revenue. Pacific Avenue takes a collaborative approach in partnering with strong management teams to drive strategic change and assist businesses in reaching their full potential. For more information, please visit www.pacificavenuecapital.com.
Pacific Avenue Capital Partners, LLC
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Original Source: Pacific Avenue Capital Partners Completes Continuation Vehicle Investment With Emerald Textiles