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 Economists may be saying that things are on the rebound, but that doesn't mean expansion capital is all that easy to come by in the current environment. So when Steve Silk, the CEO of private equity-backed Orval Kent Food Co., operator of Chef Solutions Holdings LLC, wanted to expand the company and its primary owner Quest Management Co. LLC said it had no more funds to pump in the company, he went looking for a minority investor. "We really wanted a long-term strategic partner," Silk told The Deal when discussing what the company was thinking when it decided to pursue additional investors. Silk found that partner in New York buyout shop Mistral Equity Partners, which announced a $24 million investment in Orval Kent on Monday, which will go primarily toward expanding the company. (The Deal Pipeline subscribers can read the full story here.) Silk, who was instrumental in Quest Management Co. LLC's $600 million buyout of the company in 2004, said some of the capital will be used to reduce the company's debt and also to fund acquisitions. While Silk declined to discuss the specifics of Orval Kent's debt, the Brooklyn, N.Y., native said bringing in a minority stakeholder was a strategy that Orval Kent and Questor started discussing about a year ago. At the time, Questor did not have any additional funds to put into Orval Kent, so the two start contemplating the idea of seeking a minority partner. About six months later, Questor hired Piper Jaffray & Co. to run a process. Why Piper? Silk said the investment bank has a "great understanding of the refrigerated foods space." Orval Kent's revenues have nearly doubled to about $250 million since it was acquired by Questor, and Silk predicted the company's revenues could double again in three to four years through a combination of acquisitions and organic growth. In May 2008, Orval Kent acquired Fresh Creative Foods LLC for undisclosed terms. Questor also sold two of Orval Kent's assets since it acquired it, including Pennant Foods to Lindsay Goldberg & Bessemer LP in 2006, so it can solely focus on the Orval Kent brand. Silk has an optimistic outlook on the fresh prepared foods segment, noting that there are several companies in the $30 million to $50 million space that compete against each other, which leaves a lot of room for consolidation. He added that "consumer demand is high" for fresh prepared food products as consumers have become more "time starved." "We think it's the most vital space in the grocery industry," Silk said. Still, when it comes to bringing in even more minority shareholders or taking more capital from Mistral down the road, Silk said: "You will never know what may happen in the future, but I doubt it." - Demitri Diakantonis
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