Consolidation in the OEM (Original Equipment Manufacturers) window and door manufacturing sector is raising interest from private equity and institutional investors. Seven Point Equity Partners and its limited partners aren’t just only capitalizing on the opportunity, but are doubling down.
Seven Point Equity Partners has closed its RS7 Continuation Fund, a single-asset continuation fund with $120 million in equity commitments. The continuation fund is allowing certain investors in The RiteScreen Co., an independent manufacturer of window and patio door screens to sell their stakes, while new and existing investors have chosen to roll over into the fund. Sellers who invested alongside the firm originally in 2014 will realize a gross multiple on invested capital of over 10x, according to Seven Point.
The continuation fund rollover and introduction of new limited partners are in an attempt to capture the opportunity from the consolidation of OEMs which is creating value for RiteScreen’s product offering.
“As OEMs have consolidated through M&A and their purchasing functions have become more sophisticated, OEMs have outsourced more of their in-house screen manufacturing operations, driving strong growth for RiteScreen and other outsourced screen suppliers,” says Mark Kammert, partner at Seven Point Equity Partners. “Because nearly half of OEM window screens are still manufactured in-house by the OEMs themselves, RiteScreen sees the outsourcing trend as likely to continue for the next decade.”
Seven Point explains that the firm’s operational transformation of RiteScreen has allowed the firm to offer window and door companies meaningful cost savings and has deepened its wallet share with existing OEM customers. The firm attributes its growth to enhance market share gains as a result of the pace of screen outsourcing by OEMs.
As the benefits of outsourcing certain screen production look to continue, the opportunity for RiteScreen and similar outsourced suppliers will only continue to grow.
“To keep pace with the consolidation of the OEM sector, RiteScreen is also interested in acquisitions of smaller screen manufacturers and suppliers of complementary products to the window and door sector,” says Kammert. “Many of these small-scale targets could benefit from RiteScreen’s sophisticated business systems in manufacturing, information systems, marketing, sales and human resources to drive down internal costs and gain new sales.”
Seven Point and its investor base are looking to jump on these trends and have injected new capital into the firm to expand on the screen outsourcing market, expand its sales channels into homeowners and end consumers through commerce and retailers, open new manufacturing facilities and acquire other related manufacturers.
OEM consolidation and outsourcing is on the rise and some firms are looking to make the most of this opportunity. Let me know your thoughts at [email protected].
–Cole Lipsky
