A new private-equity firm, backed by members of Atlantic Canada's McCain and Sobey families, looked at 100 Canadian companies in a search for its first investment – but, in the end, it didn't travel far for its inaugural deal.
The McCain-Sobey vehicle, SeaFort Capital Inc., is buying A.W. Leil Holdings Ltd., a crane rental business based in New Glasgow, N.S., the home community of the Sobey supermarket family and not far from the McCains' New Brunswick frozen-food base.
Rob Normandeau, president of Halifax-based SeaFort, said the transaction sits in the sweet spot for the investment firm – it is a small-town, old-economy company with a profitable business and a founder-owner looking for a succession solution.
SeaFort is joining with two Leil senior managers to buy the company from 79-year-old Allison Leil Sr., whose business, founded in 1958 and now with 60 employees, rents out industrial cranes throughout Atlantic Canada and as far as Toronto.
SeaFort Capital was established earlier this year as a vehicle for an investor group that includes Donald Sobey, one of the architects of the Sobey grocery chain; his son Rob, a top manager in the family businesses; and Scott McCain, a senior executive at Maple Leaf Foods Ltd. and eldest son of the late Wallace McCain, co-founder of the family's global French-fry business.
Neither the sale price nor revenues were disclosed for the Leil company. SeaFort is targeting companies with EBITDA (earnings before interest, taxes, depreciation and amortization) of between $2-million and $10-million a year.
As is the case with the Leil company, target firms would typically be caught in a demographic squeeze as owners prepare to retire, and company managers are seeking investment partners to help the businesses continue. Mr. Normandeau expects to build a portfolio of eight companies, with two or three to be added next year.
SeaFort has a strong Atlantic flavour, with its six equity partners having ties to the region. Mr. Normandeau, a former Bay Street lawyer, has worked in Halifax eight years, and SeaFort chairman Scott Brison is a Liberal member of Parliament from Nova Scotia with investment banking experience.
But SeaFort is looking for companies across small-town, small-city Canada where its founders feel there is a gap in financing.
Among the more than 100 companies it looked at, SeaFort made offers to 12 and got into detailed discussions with six. Yet its first deal arose from a casual encounter: Rob Sobey ran into the Leil general manager, Larry MacDonald, at the local yacht club. The manager had read an article about SeaFort's mandate in The Globe and Mail, and that got the talks rolling. Mr. MacDonald will now be an ownership partner.