MINNEAPOLIS—When Norwest Equity Partners laid the foundation for Minnesota Rubber & Plastics, it always hoped it would turn into a launchpad to help the firm long after the private equity's ownership tenure ended.
That time is now.
NEP has sold the company to global investment firm KKR & Co. L.P. for an undisclosed amount in a deal that closed in mid-November. The firm had owned Minnesota Rubber for the past six years and invested significantly to give the company a strong foundation for further growth.
It trusts that KKR will continue the work it started.
"We want to make sure our companies go into the hands of people who are like-minded, want to grow businesses, have a great deal of capability and a level of integrity and culture that is similar to ours," NEP Managing Partner Tim DeVries said. "KKR is a great owner for this business going forward. They have the highest level of integrity, they perform extremely well and we couldn't be happier that Minnesota Rubber is moving on to a firm as fine as KKR."
Minnesota Rubber & Plastics—officially Quadion L.L.C. but it does business under the MR&P name—is a Minneapolis-based producer of seals and transmission components for highly demanding markets. The firm focuses on three core areas: automotive/transportation, water and beverage, and medical.
At the time of NEP's investment, Minnesota Rubber chased a variety of markets. DeVries said NEP brought more focus, and that led to establishing four core verticals for the firm, the three aforementioned areas plus fluid power.
Minnesota Rubber CEO Jay Ward said in the last few years, the company has shifted its focus away from fluid power as the company found it difficult to leverage its differentiated technology in that space. While it still serves the fluid power industry with its legacy business, it has doubled down its focus on medical because it's become Minnesota Rubber's fastest growing segment.
He expects the growth trends to continue under KKR.
"KKR comes at this in a partnership manner," Ward said. "If we have strengths in certain segments, we want to further penetrate them. At some point we may look at adjacencies, but the markets we're focused in are quite large. We feel there is a tremendous amount of opportunity to grow organically. However, if another company will allow us to accelerate our strategy we are now in a position, thanks to NEP, to make strategic acquisitions."
Setting the foundation
Since 2012, NEP has invested about $20 million upgrading machines and building out Minnesota Rubber & Plastics' infrastructure. That footprint consists of seven locations—four in the U.S. and one each in Mexico, France and China—and utilizes elastomers/silicones, plastics and integrated components, bonding elastomers and plastics to produce its products.
Ward said more than half of its business comes from elastomers, including silicone, while plastics accounts for about 20 percent and its integrated components/bonding capabilities have been growing fast thanks to increased medical demand.
That deep library of intellectual property was one of the main attractions to KKR.