For its latest acquisition, a local private equity firm is making its first leap into manufacturing.
Downtown-based Turning Basin Capital this week announced its purchase of Pinnacle Manufacturing, a Boaz, Alabama-based company that makes and refurbishes large storage tanks used in environment and industrial cleanups.
Terms of the deal were not disclosed. The transaction closed Feb. 14.
It’s the sixth deal that TBC and its affiliates have completed since it was founded in 2013 as an offshoot of former local investment banking firm Ewing Bemiss & Co.
Managing director Mark Murray said the Pinnacle deal is a departure for the firm, which historically has acquired service businesses that cater to the oil and gas industry.
“The previous businesses we acquired were service businesses around existing infrastructure,” Murray said. “This is our first investment in a manufacturing business.”
Of its previous five deals, four were companies that service oil wells and pipelines around Appalachia. The other was a Texas-based company that services stationary above-ground storage for fuel and oil.
Murray said the Pinnacle deal provides a cushion against the cycles its other portfolio companies must weather because they’re tied to the energy industry, which can ebb and flow depending on demand, the economy and other factors.
“We liked that what Pinnacle is devoted to is not uber-cyclical like oil and gas, but has a nice baseline of steady demand,” he said.
With the deal come more than 100 employees and a large manufacturing facility in northeast Alabama.
The company was founded in 2006 by brothers Jason and Joby Satterfield. They’ll remain part owners of the company, with TBC owning a majority stake. Denver private equity firm Vigeo was also part of the deal as a minority investor.
Tom Willingham, another TBC managing director, said the Satterfield brothers, who are in their early 40s, will continue on at Pinnacle to help capitalize on the new investment.
“It fits well with our playbook in that it has owners who are well established and well regarded but have maxed out on what they can do on their own,” Willingham said, adding that growing Pinnacle’s reach geographically is a priority.
From its office in Shockoe Slip, TBC targets companies valued at $25 million and below, often with annual earnings of $2 million to $4 million.
The company funds its deals with money from a recurring group of investors and debt, in this case Regions Bank.
It then looks to grow the companies before weighing exit options, which can include selling to other parties, including larger private equity firms.
TBC isn’t the only Richmond investing firm that’s been keeping busy in recent months.
Blue Heron Capital was part of a group that last month invested $11 million into a northern Virginia-based online home healthcare company.
And Tuckahoe Holdings, a 2-year-old downtown-based private equity firm run by brothers Peter and Stuart Farrell, closed its latest deal just before the new year with the acquisition of a New York-based company that builds marinas and floating docks.