Swander Pace Cleans Up With Gilchrist & Soames
The firm’s managing director, Mo Stout, says even during the recession, premium brands in the hospitality sector performed better than mid- or lower-level offerings, leading to a successful exit of its investment in the luxury soap maker.
Middle-market private equity firm Swander Pace Capital has cleaned up with luxury soap supplier Gilchrist & Soames, exiting the London-based company that serves the four- and five-star hospitality industry with a sale to Guest Supply, a wholly owned subsidiary of Sysco Corporation.
“Luxury hotels is not a core focus area for us, but it is a channel that we’ve had a good experience with, and we would absolutely—with the right business—be happy to make further investments,” says Mo Stout, managing director at Swander Pace. “It’s been a good experience.”
Swander Pace—established in 1996, with offices in San Francisco; Oakville, Ontario; and Bedminster, N.J.—focuses exclusively on the consumer-products space. Its investments are typically in the $20M to $40M range in companies with annual revenue of $30M to $300M. The portfolio contains companies from several subsectors within the consumer space, including beverages, branded food, food service, pet products, sporting goods, nutritional supplements, specialty apparel, and over-the-counter medicines.
Stout says a major part of the firm’s investment thesis is to back great management teams and to help portfolio companies extend their footprint globally with long-term relationships that Swander Pace has established in the supply chain and distribution worlds.
“We focused on three things, fundamentally, in terms of the value that we added,” says Stout. “We helped the business enter some large national and global accounts. We helped them upgrade their facilities. And we helped them develop a global presence within the market.”
Stout says his firm has cycle-tested and found that the luxury hotel industry performs better in economic downturns, making Gilchrist & Soames an attractive investment—not only for private equity but, ultimately, for Guest Supply, which is one of the world’s largest suppliers of products designed to make the guest experience better in hotels, resorts, and spas
Overall, says Stout, Swander Pace is very bullish on consumer products leading into 2016.
“We’ve survived high-multiple environments like we saw back in 2007,” he says, “and we like what we’re seeing right now.”
Swander Pace’s fifth fund has currently invested and allocated over 50 percent of its committed capital.
“We fundamentally believe that the types of consumer deals that we are doing—non-durables—is very stable,” says Stout. “There are pockets of growth that we seek, where we can add value to particular companies and drive great equity returns.”
San Francisco–based Swander Pace Capital’s managing director, Mo Stout, discusses the firm’s exit of luxury soap maker Gilchrist & Soames.