Apogem and Headlands among investors on Timber Bay Partners-led deal

Timber Bay Partners, Apogem Capital, Headlands Capital and Morningside Capital Management have emerged as backers of a GP-led structured deal, Secondaries Investor has learned.

Cincinnati-headquartered Timber Bay was the lead buyer on the transaction, according to a December statement. The deal involved US small market private equity firm RFE Investment Partners’ portfolio company ZRG Partners, an executive recruitment firm.

Atlantic-Pacific Capital advised on the transaction, according to the statement.

Concurrently, RFE closed on significant new equity and debt capital that capitalised ZRG’s balance sheet, according to a separate statement from Atlantic-Pacific.

Michael Rubel, managing director at RFE, described the transaction as a single asset GP-led co-invest. ZRG was in a standalone vehicle in which it was the only asset prior to the transaction. That vehicle remains a shareholder with a new vehicle set up as a new shareholder, Rubel explained via email. Both vehicles are controlled by RFE.

A company-level preferred equity financing was put in place as part of the transaction. The financing was used to to distribute capital back to investors and will be used for further growth capital.

The original cost of the investment was returned to the LPs, with a subset choosing to additionally re-invest their proceeds into the vehicle. None of the LPs chose to exit the vehicle, Rubel confirmed.

ZRG said in a separate statement that it had closed on a senior credit facility led by Truist Bank.

The transaction value for recapitalising the company’s balance sheet via the secondaries transaction was several hundred million dollars, Rubel confirmed. Investors in the transaction included secondaries funds, funds of funds, family offices and corporate pensions, according to the Atlantic-Pacific statement.

Days before it disclosed the secondaries transaction, ZRG said it would acquire Hub Recruiting, a recruiting process outsourcing firm.

Apogem Capital managing director Bart Shirley confirmed to Secondaries Investor that the firm had participated in the new preferred equity financing, adding that its secondaries team has a longstanding relationship with RFE.

“The company redeemed some existing preferred shares and will use additional proceeds to execute further long-term growth initiatives,” he added.

Headlands Capital managing partner David Park described the structure as a “win/win”, adding that ZRG is well positioned to accelerate upon its acquisition and hiring plans.

Morningside Capital did not respond to a request for comment.