Middle-market business holding company Compass Diversified acquired PrimaLoft, Inc. parent PrimaLoft Technologies Holdings, Inc. for an enterprise value of $530 million from private equity firm Victor Capital Partners.
Compass Diversified (CODI) already owns and operates 10 businesses worth a combined $3.1 billion, including tactical apparel brand 5.11, footwear fit performance technology provider Boa Technology, quick-turn manufacturer Advance Circuits and packaging and insulation company Altor Solutions.
Following the close of the transaction, expected in early July, PrimaLoft will continue to be led by its current leadership team.
Based in Latham, N.Y., PrimaLoft was established in 1983 by Albany International Corporation in response to a U.S. Army request to develop a synthetic insulation for soldiers that replicated the warmth and weight characteristics of traditional goose down fabric, but also remained warm when wet.
In addition to maintaining high performance in wet conditions, the portfolio of PrimaLoft synthetic insulations is designed to power products that can both mimic natural down aesthetics and provide the freedom to design garments ranging from stylish puffers to lightweight performance apparel. PrimaLoft prides itself on delivering insulations that can enable better sustainability characteristics through the use of recycled, low-carbon inputs.
One of PrimaLoft’s jacket insulation alternatives is its patented ThermoPlume product, which the company says features comparable performance to down insulation when dry, superior performance to down insulation when wet, can be made with 100 percent recycled raw materials and can be integrated into the traditional down manufacturing process.
The company operates with the ethos, “Relentlessly Responsible,” as a means to create and deliver high-performance products while reducing impact on the environment. PrimaLoft has diverted 614 million plastic bottles from landfills since 2015, pioneered biodegradable and carbon-negative fiber polymers, and reduced emissions by up to 70 percent for its proprietary line of insulations made with P.U.R.E. manufacturing technology. The material innovator said 91 percent of company sales are from products with at least 50 percent recycled content.
PrimaLoft’s reach extends across more than 950 global brand partners including Nike, Adidas, Lululemon, Athleta, Patagonia, Polo/Ralph Lauren, Prada, J.Crew, L.L. Bean, Arc’teryx, Stone Island and Boll & Branch. The company also offers a licensing program, providing its technologies and branding to an expanded set of non-woven and other textile markets.
Currently, CODI says PrimaLoft product has room to gain significant market share, pegging its current share at less than 3 percent of the $3 billion total addressable market.
PrimaLoft generated $76 million in annual revenue on $32 million in adjusted earnings before interest, tax, depreciation and amortization (EBITDA), representing approximately 40 percent EBITDA margins. Since 2017, the company’s revenue compound annual growth rate (CAGR) basis has risen 16 percent per year. Additionally, the company’s high free cash flow has enabled the PrimaLoft to keep capital expenditures down to just 1 percent of sales, or less than $1 million.
PrimaLoft president and CEO Mike Joyce said in a statement that Compass Diversified shared the material company’s commitment to building a sustainable future through innovation.
“We believe PrimaLoft is well-positioned to continue its purpose to unleash the full potential of people, products, and planet, as we address the need for sustainable product innovations in the apparel industry, and beyond,” Joyce said. “We have built enduring partnerships with key customers through our ability to consistently deliver innovative products that elevate sustainability and performance, and we look forward to leveraging CODI’s world-class platform to continue to push the synthetic materials market forward.”
Joyce also highlighted the brand’s work under Victor Capital, which “has been a driving force behind the ability of our team to develop, advance and amplify our mission to deliver high performance products that reduce impact on the environment. The power of the PrimaLoft brand has grown exponentially during our time together, and our suite of products now includes technologies and sustainability platforms that have further established our position as a leader within our global industries.”
William Blair & Company is serving as lead financial advisor to PrimaLoft along with Baird. Blank Rome LLP is PrimaLoft’s legal advisor.
Victor Capital first acquired a majority interest in PrimaLoft in 2017, while the insulation manufacturer’s management team maintained a “significant” investment in the business. Upon the CODI sale, PrimaLoft management will still own 9 percent of the total business.
Upon the acquisition, PrimaLoft employees will receive some proceeds from the sale from the PrimaLoft Prosperity Plan, which Victor Capital and the material company’s management put in place to ensure all employees would benefit financially from the growth of the business.
“PrimaLoft has all the attributes we look for in an acquisition and once closed, will add to CODI’s track record of acquiring industry-leading, innovative businesses with strong competitive advantages,” Elias Sabo, CEO of Compass Diversified, said in a statement.
“PrimaLoft is a market leader and possesses significant intellectual property, operates in a large, growing addressable market and has a world class management team led by Mike Joyce. In addition, PrimaLoft is a high-growth and high-free cash flow generating business that operates at the forefront of sustainability and is fully aligned with CODI’s mission of conducting our business in a responsible and ethical manner while delivering superior investment results,” Sabo continued. “We’re excited to support PrimaLoft’s next phase of growth.”
Thermore debuts 100 percent recycled insulation offering
Another insulation provider, Thermore, is launching a new product that it bills as “half fibers, half insulation, fully recycled.”
The Milan-based thermal insulation provider debuted EVOdown Recycled, made of 100 percent recycled fibers from PET bottles. The fabric is designed to bridge the gap between free fibers and traditional padding, delivering both an ultra-soft hand and drape of blow-in fibers in a rolled form.
The newest version of EVOdown consists of millions of free fibers encapsulated by two containing outer layers. Thermore says consumers will benefit from the lightweight and silky touch of EVOdown-made garments, as well as its ease of care.
EVOdown Recycled is another step towards sustainability for the Milan-based company, which has now converted over 97 percent of its product turnover into insulations made of either fully or partially recycled fibers.