Berkshire, Freeman Spogli make N.E.W. investment

Berkshire Partners and Freeman Spogli have made a major investment in N.E.W. Customer Service, a portfolio company of TH Lee Putnam Ventures (THLPV). Terms were not disclosed, but the transaction gives N.E.W. an enterprise value of about $1.21 billion (€943 million).

Credit Suisse acted as financial advisor for N.E.W. for the transaction, and with CIBC and Bank of America it is managing debt financing for the new ownership group.

Founded in 1983, N.E.W. administers more than 70 million customer service contracts for consumer electronics, home office equipment, appliances, sporting goods and other products. It also runs eight call centers in the United States and the Dominican Republic and manages a network of more than 25,000 independent centers worldwide. The company generates more than $2 billion in sales for retailers and manufacturers annually. THLPV first invested in N.E.W. in 2004.

Boston-based Berkshire has a history in retail. It invested in Canadian women’s clothing store Aritzia late last year, and was involved in the acquisition of New Jersey-based party-supply retailer Party City last September. Berkshire has managed an aggregate $6.5 billion through seven funds, and has invested in 85 companies over the last 20 years. Freeman Spogli, which operates offices in Los Angeles and New York, currently manages a $1 billion fund.

THLPV, a joint venture of Thomas H. Lee Partners and Putnam Investments, has $1.1 billion of commitments under management, and has offices in New York, Boston and London. Last November, three veterans of THLPV—Renny Smith, Ramanan Raghavendran, and former American Express CEO Harvey Golub—launched their own firm, GRS Partners, which intends to raise $500 million for its debut fund.