The Halifax Group has sold Soil Safe to American Capital Strategies, in a deal valued at $114.5 million. Alongside the transaction, American Capital also acquired TPS Technologies as an immediate add-on to the Soil Safe platform, paying a total of $147 million for both companies.
The Columbia, Maryland-based Soil Safe is a provider of environmental services. The company’s treatment facilities receive large amounts of contaminated soil, and infuses it with additives designed to bind the contamination irreversibly to the earth. This prevents further leeching once it’s replaced in the environment.
The sale of Soil Safe allowed Halifax to book a roughly four times return on its invested equity.
When Halifax first acquired the company in 2003, it gained a majority position from company founder Walter Kennell, who also rolled over an equity position to retain a minority stake. There were no details made available regarding how much capital Halifax invested in the original acquisition.
Under Halifax’s watch, the company brought in a new CEO, Ed Kilpela, and added two new locations along the Washington, DC–New York corridor. The company roughly doubled its EBITDA during Halifax’s two-year holding period.
The firm was also able to engineer two dividend recaps throughout the investment, one coming roughly a year after the acquisition, and the other about six months ago. Both recaps contributed to the four-times return on equity.
The sale comes at a propitious time for Halifax, as it is in the midst of raising its second fund, Halifax Capital Partners II, LP. The firm, according to regulatory filings, has closed on $113.5 million of a targeted $300 million for the new fund, and investors identified include Parish Capital, SunAmerica, Mellon Bank and Rosebud Partners.
The sale of Soil Safe follows an earlier exit from Halifax, in which the firm unloaded its investment in Meineke Car Care Centers earlier this year through a secondary sale to Allied Capital. The firm had teamed with the Charlotte, North Carolina-based Carousel Capital on the Meineke investment.
Halifax has offices in Dallas, Raleigh-Durham, North Carolina, and Washington, DC, and is affiliated with Texas Pacific Group and Colony Capital. William Rogers, a co-founder of Halifax, was previously part of the investment team at the Robert M. Bass Group. David Dupree, meanwhile, the CEO and co-founder of Halifax, came from The Carlyle Group, where he was a managing director.
For American Capital, the acquisition will give the Bethesda, Maryland investment firm a 79 percent stake in Soil Safe. As part of the investment, the firm provided equity, senior-term loans, senior and junior subordinated debt and a revolving credit facility.
Houlihan Lokey Howard & Zukin advised the sellers on the transaction, while Latham & Watkins provided legal counsel.