Deals

Harvest executes second Natural Products recap

New York-based Harvest Partners has executed its second recap of Natural Products Group after launching the personal care products platform just over a year ago.

-

Harvest Partners has netted another $62.5 million (€52 million) from its Natural Products Group investment, following the firm’s second dividend recapitalisation of the personal-care products maker. In the two recaps, Natural Products Group has distributed roughly $200 million in total dividends to the investors.

Harvest originally launched the Natural Products Group platform in November, 2004, when it invested $93 million of equity into the buyout of Levlad Inc. and its Arbonne International subsidiary.

Levlad manufactures and markets organic shampoos, conditioners, soaps, deodorants and other personal care products under the Nature’s Gate brand, while Arbonne markets its own branded herbal products through a direct sales network. Both entities are based in California.

When Harvest first acquired the company, it was generating annual sales of more than $200 million. During Harvest’s brief ownership, the company’s sales have increased steadily, while its EBITDA has more than doubled.

The market for natural and organic products continues to grow, and private equity groups have profited on the expansion. JH Partners and Berkshire Partners, for instance, have inked two recaps on their investment in natural cosmetics company MD Beauty, which together returned around 250 percent of their original 2004 investment.

For Harvest, this latest recap will give the firm a return of no less than 2x its invested equity, and the New York-based firm continues to hold a significant stake in the business going forward.

Ira Kleinman, senior managing director, Harvest Partners

Harvest senior managing director Ira Kleinman cited the industry dynamics as driving the growth of Levlad and Arbonne. “The personal care products industry is a very large, growing market in which we have continued to see major shifts towards natural and organic products,” he said. 

The distributions couldn’t come at a better time for Harvest, as the firm is in the midst of raising its fifth fund, Harvest Partners V. The group is reportedly seeking around $650 million for the new vehicle, which would represent a small jump over its previous fund, the 2002-vintage Harvest Partners Fund IV.

CIBC and Wachovia were tapped to provide debt financing for the recapitalisation.