Vestar on the hunt for add-ons and expansion after Roland Foods recapitalization

Vestar Capital Partners' quest to make Roland Foods ripe for an exit included a recapitalization of the New York-based specialty importer earlier this summer that will give it flexibility to execute its growth plans, including acquisitions in core or adjacent product categories, Ken O'Keefe, Vestar managing director and chief operating officer, told PE Hub.

Roland is a global brand and specialty foods importer and supplier. The majority of its customers are foodservice distributors, with some specialty retailers and restaurants. The company sources over 2,500 products that are imported from 40 countries and 350 suppliers, including roasted peppers, artichokes, balsamic vinegars, olives, quinoa and tahini.

Roland's capital structure was expiring and its flexibility to execute on its growth objectives was limited, said O'Keefe, who is a member of Roland's board. A recapitalization aligned with Roland's growth plans.

O'Keefe said Roland is looking to expand its capabilities through acquisitions in core or adjacent product categories that exhibit high growth characteristics, defensible margins, brand appeal and are asset-light, and can also benefit from Roland's platform and infrastructure. Roland is also looking to expand to high-growth menu offerings that it does not presently offer. This includes Southeast Asian, Latin American, Middle Eastern and African products. Geographically, Roland could also look to expand to Canada.

Eyeing growth

The firm also sees an opportunity to make even more add-ons. "We have a robust pipeline of potential acquisition targets which supports our overall growth strategy and value proposition for our customers," O'Keefe said. "I would be disappointed if we did not make multiple acquisitions over the coming years."

Roland expanded its product offering with two add-on acquisitions during the last five years. The company moved into the sweet food category with the acquisition of Albert Uster Imports (AUi) in 2019. AUi is a Gaithersburg, Maryland-headquartered importer and distributor of pastry, bakery and confectionary foods. In 2023, Roland added ifiGOURMET, a Gurnee, Illinois-based importer of gourmet dessert products and ingredients. Vestar considers it a complementary business to AUi.

Vestar acquired Roland in 2013. In 2017, Harvest Partners made a $125 million recapitalization investment in Roland and became a minority stakeholder. Harvest was refinanced out of Roland along with other debt providers with the closing of the recapitalization on July 31.

"We were fortunate to have a strong group of supportive financing sources who have done business with Roland for an extended period," O'Keefe added. "As a result, we were able to secure a highly attractive financing package which supports Roland's growth objectives - including a deferred draw term loan to facilitate acquisitions. Vestar and co-investors also contributed a significant amount of equity."

Vestar declined to share who the co-investors were in Roland.

Path to an exit

Vestar contemplated an exit in 2019, according to O'Keefe. However, the pandemic and its impact on Roland caused the firm to prioritize the business' performance. "During this time, we, along with Roland's management team, identified significant growth opportunities to increase value which we determined we could not realize without a recapitalization," he added.

Currently, there are no plans for an exit. But the recapitalization and Vestar's plans for future add-ons could better position the firm for an exit down the road.

"We believe Roland's business model, management team plus historical and future growth prospects will be attractive for many types of investors in the future including other private equity sponsors and strategic buyers," O'Keefe said.

Based in New York, Vestar is a middle market private equity firm with a focus on the sectors of consumer, business and technology services, and healthcare. Since it was founded in 1988, Vestar funds have invested over $12 billion in 94 companies with a total value of approximately $61 billion as of August.

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