CNL Strategic Capital LLC, a publicly registered non-traded limited liability company, has purchased an approximately 84 percent equity stake and made a concurrent debt investment in Vektek Holdings LLC.
Founded in 1974 and headquartered in St. Joseph, Missouri, Vektek designs, engineers and manufactures automated work-holding products for computer numerical control (CNC) machining. A manufacturer of high-pressure hydraulic clamps and related products, Vektek products are intended for the industrial, automotive, agriculture, medical, technology and aerospace industries.
According to a filing with the Securities and Exchange Commission, CNL Strategic invested $81.3 million in Vektek, comprised of an indirect common equity interest investment of approximately $56.9 million and a concurrent debt investment of approximately $24.4 million made through wholly-owned subsidiary, Vektek Strategic Capital DebtCo LLC, in the form of a senior secured note issued by Vektek.
At closing, substantially all of the remaining Vektek equity is owned by certain of the pre-closing members of Vektek.
Vektek sells customized products directly to customers, as well as through multi-step channel partners.
“Based on our due diligence and industry analysis, we believe the increased demand for industrial automation in CNC machining provide strong secular tailwinds for Vektek’s growth,” CNL Strategic said in the filing. “Vektek’s revenue has grown at an approximately 4.5 percent compound annual growth rate from the year-ended December 31, 2006 to December 31, 2021.”
This is the 11th company in CNL Strategic Capital’s portfolio.
CNL Strategic Capital acquires controlling equity stakes in combination with loan positions in middle-market businesses. The company is externally managed by CNL Strategic Capital Management LLC and Levine Leichtman Strategic Capital LLC.