KPS, Pegasus see profit in Japan sale

New York-based KPS Special Situations and Pegasus Partners have returned roughly 1.5x the equity from their investment in industrial equipment maker Genesis Worldwide II. The investor group recouped part of that sum through yesterday’s sale of Genesis subsidiary GFG, a maker of roll-coating equipment and electrostatic oilers, which was sold to Mitsubishi-Hitachi Metals Machinery. Terms of the sale were not disclosed.

In the sale of GFG, KPS limited partner Mitsubishi served as matchmaker in the deal. The Japanese conglomerate is one of the larger backers of the KPS funds, and KPS managing principal Michael Psaros credited that relationship with helping the two parties complete the cross-border deal.

KPS and Pegasus originally acquired Genesis II out of bankruptcy protection in 2001. According to Psaros, the investment would already qualify as success for the firms involved. “It’s been a very successful turnaround,” he told PEO. “We saw four years ago that this was a company with the best brand name in its industry that had the best technology and the best engineers, but still had an enormous amount of problems that had to be answered for.”

Psaros noted that the investors immediately installed new management, bringing in Walter Stasik as the CEO, and under his guidance Genesis II has moved to cut excess capacity, while expanding its markets globally. Prior to the KPS and Pegasus investment, Genesis’ customer base was made up entirely of US buyers. Today, over 50 percent of the company’s revenues come from overseas locations, such as China and India.

GFG, the unit sold to Mitsubish-Hitachi, had represented roughly 20 percent of Genesis II’s revenues. The investors continue to hold a 100 percent stake in the company, and Psaros expects that the firm will see continued upside from the investment. When the time does come to sell, however, he expects that like GFG, a strategic buyer will be the likely destination for the company.