ACAS Offloads CIBT Solutions - Analyst Blog

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On Tuesday, American Capital Ltd. ( ACAS ) announced the divesture of its portfolio company CIBT Solutions Inc. (CIBT). The unit was acquired by ABRY Partnersin mid-December 2011 for $215 million.

CIBT leads globally in providing advanced travel document processing services.  Operating in North America, Europe and Asia, the company provides services to multinational corporations, global travel management companies, tour and cruise operators, government agencies and Do-It-Yourself travelers. Additionally, it aids approximately one million travelers annually to obtain short-term visas, passports and other documents for business travel and holidays.

In May 2006, ACAS made debt investment in CIBT for supporting Audax Group's acquisition of CIBT. Later on, in January 2008, the company acquired CIBT from Audax through a One-Stop Buyout.

ACAS has earned 15% compounded annual rate of return over the life of its total debt and equity investments, including interest, dividends fees and expected escrow proceeds.  However, the proceeds were below the third-quarter 2011 valuation of ACAS's investment by $2 million or 1%.

Despite economic downturn, CIBT expanded globally, growing both organically and through an active acquisition program. The company's market position has helped ACAS to sell it off at a very good price. ACAS considers the deal to be positive for the company and expects to continue to seek new One-Stop Buyout opportunities of up to $300 million. The company will also look for lending opportunities from $10 million to $100 million. However, ACAS retained its equity interest in CIBT.

North America-based ABRY Partners, who has bought CIBT, is an experienced and successful media, communications, business and information service providers, which mainly focusing on private equity investment firms. The firm invests in high quality companies and associates with management to help build their businesses. Since its inception, ABRY has completed over $27.0 billion of leveraged transactions and other private equity, mezzanine or preferred equity placements, representing investments in approximately 450 properties.

ABRY's experience and ongoing growth in international travel market will facilitate CIBT to further grow in the industry and maintain market share. Additionally, the acquisition will help ABRY in its strategic objective of maximizing the value of investments by concentrating on businesses where it has substantial operating and investment experience.

Back in September 2011, ACAS announced the divesture of its portfolio company VP Acquisition Holdings Inc. (Value Plastics). The unit was acquired by Nordson Corporation ( NDSN ) in August 2011 for $250 million.

Out of the proceeds, ACAS received $138 million and realized a gain of $93 million during the third quarter of 2011, subject to post-closing adjustments. Moreover, including investments by ACAS's associated funds under management in Value Plastics, the proceeds totaled $222 million and gain totaled $157 million for ACAS.

Moreover, in November 2011, ACAS has announced an investment of $10 million in order to support RBC Capital Markets Corp.'s syndication of $75 million Second Lien Term Loan financing, followed by its plan to invest $15 million to support BMO Capital Markets' syndication of $100 million Second Lien Term Loan financing, which helped Teachers' Private Capital to purchase majority stakes of Flexera Software Inc in October.

In August also, ACAS supported the merger of Survey Sampling International and Opinionology Inc. through mezzanine financing. The company provided $50 million of Senior Subordinated Note financing for the deal.

ACAS is a publicly traded private equity firm and global asset manager. It directly and through its asset management business, initiates, underwrites and manages investments in middle market private equity, leveraged finance, real estate and structured products.

The company has the capability to provide flexible financing solutions ranging from a variety of senior debt and uni-tranche to mezzanine and equity co-investments. Further, ACAS provides multi-currency funding with underwriting platform globally and facilitates the growth of portfolio companies. Such benefits provided by the company urge private equity clients to consider it as an investment partner, which in turn helps in the growth of the company.

ACAS currently retains its Zacks #3 rank, which translates into a short-term 'Hold' rating. Considering the fundamentals, we are maintaining our long-term 'Neutral' recommendation on the stock.


 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: ACAS , NDSN

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