Kainos Capital, a food- and consumer-focused a mid-market private equity firm headquartered in Dallas, has sold ingredients manufacturer Florida Food Products to MidOcean Partners.
The price was undisclosed but Toronto-based asset manager MacNicol & Associates reported in April that FFP was for sale and expected to fetch as much as $600 million.
FFP provides fruit- and vegetable-based flavor and color enhancements as well as clean-label cures used in the packaged meat, foodservice and pet food markets. Founded in 1954, the company is headquartered in Eustis, Florida, where it runs a processing facility that also conducts juice extraction and fermentation, drying and packaging, among other processes.
Managing partner Andrew Rosen praised the founding Brown family and said that Kainos’s ownership of the company had positioned it well for future growth.
“Our interest in Florida Food was driven by our belief in the importance of functional ingredients that provide demonstrable health benefits and the overall movement of consumers towards clean-label products.”
In October 2017, the firm hired a pair of USC Consulting Group executives who had previously worked as consultants specializing in supply chains and manufacturing, respectively.
Clamor for clean
A source familiar with the deal told Agri Investor that FFP was able to double in size over just two years through a rapid expansion of its customer base. In addition to bringing along a transition from family members to a professional management team and steps to diversify its supply base, the source said, much of Kainos’s investment in the company focused on adding incremental capacity to meet new demand.
“The clean label/packaged meat space has been growing double digits,” the source said. “It’s a space where relationships matter a lot and strategic buyers are quite active.”
MidOcean said its investment in FFP reflected the firm’s long-time focus on a combined flavors and fragrances market, adding that the firm expects growth in the clean label/natural ingredients market to outpace that of the traditional ingredients market in the years ahead.
“We have identified a number of opportunities to increase FFP’s presence across channels and markets fueled by organic investments, strategic initiatives and highly accretive acquisition,” MidOcean managing director Jonathan Marlow said.
Capital for Kainos’s investment in FFP came from its Kainos Capital Partners II fund, which surpassed an initial target of $750 million before closing on $895 million in 2016, a source told Agri Investor. Investments in the fund included a $50 million commitment from the Texas Municipal Retirement System, $100 million from the Massachusetts Pension Reserves Investment Management Board and $137.5 million from the Canadian Pension Plan Investment Board.
Kainos declined to comment.