Pacific Avenue Capital Partners LLC, a Los Angeles-based private investment firm focused on complex situations in the middle market, has raised new capital to purchase Emerald Textiles, a provider of fully outsourced healthcare linen management services in the Western United States, from existing limited partner investors through a continuation vehicle. The vehicle is funded by a group of leading institutional investors including Glendower Capital, funds and accounts managed by BlackRock Private Equity Partners, DWS Private Equity, Allstate Investments, CH Investment Partners and other investors. Furthermore, the transaction includes a investment from the Emerald management team and Pacific Avenue.
The transaction includes more than $200 million of committed equity capital to support the company’s next phase of growth and to buy out certain limited partners. The transaction also includes a refinancing of the Company’s existing credit facilities with funds managed by the credit group of Ares Management Corp. providing a unitranche arrangement and Wells Fargo Capital Finance providing an ABL revolver.
“Pacific Avenue, alongside the Emerald team, have transformed the linen services landscape in the Western United States. The continuation vehicle represents our continued focus building a world-class healthcare linen provider that serves the market,” said Chris Sznewajs, founder and managing partner of Pacific Avenue. “We are thankful for the partnership of our equity partners and their support validates Pacific Avenue’s disciplined investment approach.”
“This is an exciting day for our company, employees, supply partners, and customer partners. We have invested heavily in facilities and state-of-the-art equipment and have achieved incredible growth in partnership with Chris and the team over the past four years,” said Andy Kratky, Chief Executive Officer of Emerald. “The continuation vehicle allows us to leveraging what we have done well and accelerate our investment plans to serve and provide value to all of our partners. Our deep commitment to customer service, superior cleanliness, resource preservation, and safety have established Emerald as the leading provider of outsourced linen management services in the Western United States.”
As part of this transaction, Ocean Avenue Capital Partners, a limited partner in the original Emerald transaction, exited its investment in Emerald.
“Pacific Avenue has been an excellent partner on our investment in Emerald,” said Jacques Youssefmir, a founding partner at Ocean Avenue. “Chris Sznewajs and the team mapped out an aggressive strategy to build the premier healthcare linen provider in the Western United States through organic growth and synergistic M&A. They, along with Greg Anderson (founder of the original platform company) and the Emerald management team, executed on the plan to create a world-class platform. We are very pleased with the outcome of our investment, and wish Pacific Avenue and the Emerald team continued success in executing on their plan.”
Jones Day served as M&A legal and debt counsel to Pacific Avenue. Weil, Gotshal & Manges LLP is serving as counsel for the continuation fund. Piper Sandler & Co. and Stephens Inc. advised on the private debt financing. UBS Investment Bank acted as the exclusive placement agent for the equity financing. Pacific Avenue will act as the general partner of the single asset vehicle.