Inside you’ll find all the Spara news that’s fit to print; keeping you updated on the latest transaction news and information from Spara and the marketplace.

President’s Message

Happy Spring/Summer to All!

It has been a busy past few months here at Spara Capital Partners, both in the advisory practice and in our portfolio ‘fleet’ of businesses. In particular, I’m pleased to report that our hard work and specialization into infrastructure services and the related power and energy business are bringing us some extremely exciting and unique opportunities.

Advisory

On the advisory front, we are firing on all cylinders (which appears to be consistent with the current market); we have been retained on some new high-quality files, closed three transactions (two for advisory clients and one acquisition for a portfolio company) and the Spara team has continued to ‘tear it up’ on our active mandates. We’ve joined a global M&A network (M&A Worldwide) to help broaden our international distribution, primarily on sell-side mandates.

Merchant Banking

On the merchant banking side of the business, we’re moving aggressively towards an exciting inflection point. This quarter we’re pleased to announce the launch of Spark Power Corp. – an expansion and re-orienting of our renewable energy and power business along our services lines to help digest and integrate our continued growth in the space. We are looking at other acquisitions so please stay tuned! More details are included below.

Entrepreneurial

Consistent with our Entrepreneurial DNA, we have recently launched a new in-house portfolio company called Clara BioPharma Corp. (“Clara”), an initiative targeting the burgeoning Medical Marijuana industry. As a first order of business we have submitted a significant application to become a Licensed Producer (or “LP”) under the new Marihuana for Medical Purposes Regulations (“MMPR”) instituted and overseen by Health Canada. We are extremely pleased that Don Robinson has agreed to join Clara as its CEO. Don is the former President and CEO of CARA Foods and prior to that spent more than two decades as a leader within Mars Incorporated. To support Don, we have attracted some of the best and brightest partners, advisors, leaders and operators in the areas of research and education, product development, horticulture, medicine, pharma, operations, regulatory, legal and general business. Please stay tuned for exciting developments at Clara.

Please reach out to us on any files or information contained in this update and feel welcome to stop in for a visit if your summer travels bring you our way; there’s always a cold beer in the fridge. Have a safe and enjoyable summer holiday!

Jason Sparaga
President & Founder
Spara Capital

News and Updates

Powering Up: Official Launch of Spark Power Corp.

As many of you know, Spara’s portfolio interest in the renewable energy business over the past several years, Spark Solar Group, has established a unique market position built on a combination of Spara’s transaction capabilities and a growing domain expertise established in our renewable energy asset management and development business, and subsequently extended through our first acquisition, the purchase of Northwind Solutions, a leading renewable energy operations and maintenance business here in Ontario.

From our platform position in renewable energy we identified the significant growth potential in the broader energy and power services market. This led us to search for and, in April, acquire a market leading, High Voltage service business by the name of Rondar Inc., which is discussed in greater detail below. In addition, with a view to a national strategy in this area, we have entered into a Letter of Intent to acquire a complimentary Canadian renewable energy services business, with its primary operations located outside the province of Ontario. We are in due diligence on this transaction and hope to close sometime this Fall.

In order to manage this growth effectively and position our brand in the market, we have done a bit of a shuffle/re-organization of our renewables and power business and have re-launched as the Spark Power Corp. Inside we have a number of entities divided into two streams (a) Spark Power Services Corp, our service, operations and maintenance arm for both renewable and traditional power and energy assets and (b) Spark Solar Group Inc, our solar energy asset management and development business.

Oh Beehaaaave…Spara Turns International Firm of Mystery with Acceptance into Global M&A Deal Network

This month we announced our selection as exclusive Canadian partner to the international M&A deal network, M&A Worldwide. The organization includes more than 50 independent mid-market M&A firms around the globe from Asia, Europe, Africa, the Middle East and the Americas.
Member firms work together to provide access to strategic buyers, acquisition and merger candidates, and financial resources “to deliver outstanding results in cross-border transactions”.

With an increasing global dimension in our deals in the past decade; even a modest-sized divestiture file today could have us looking to international financial or strategic acquirers. So we felt it made good strategic sense to align with an organization like M&A Worldwide.

We vetted a few groups but were quickly impressed with the quality and size of deals completed with strategic partners by member firms and their disciplined commitment to working together. Culturally Spara is well aligned with the organization and other members and are confident the alignment ‘turbo charges’ our international distribution which is great for Spara clients and prospects.

Transaction Updates

Notable deals closed so far this year include:

Acquisition of Rondar Inc. by Spark Power Services Corp.

In April we completed the acquisition of Rondar Inc. on behalf of our portfolio company; Spark Power Services Corp. Ontario-based Rondar provides support services to high voltage distribution systems in the Province.  It is a great business led by a solid team and we’re proud to welcome them into the Spark Power ‘family’.

The acquisition makes solid strategic sense to Spark Power Corp., allowing the broadening of its energy services capabilities outside the current renewable energy focus and into the broader power services sector.  Rondar is a successful, 45+ year old business, with its head office in Hamilton, Ontario that has been extremely well run by its founder and has established itself as a leader in this niche service market.  The company employs some of the most skilled technicians in the country and is constantly recognized by its peers and the industry in general for its high quality service levels and technical capabilities.  Spara Capital originated, negotiated and structured the Transaction and arranged debt financing through TD Bank.

Phase II of the Management Buyout of FerPal Construction

In March we completed Phase II of the Management Buyout/Recapitalization of FerPal Construction. FerPal is North America’s largest provider of trenchless water-main rehabilitation services to municipal governments.

Over the past 10-plus years, the Spara team have worked with the company’s Principals through development and execution of a strategic growth and succession plan. In both phases of the transaction, Spara assisted in structuring, negotiating and arranging financing, and advising shareholders on both board and operational adjustments. In Phase II, Spara Capital arranged a new credit facility for the Company with BMO to complete the buyout.

“FerPal is a great example of a management buyout done right,” said Eric Waxman, Managing Director at Spara. “The Founder was able to take ‘chips off the table’ and reduce his operating role through Phase I.  The terms and valuation parameters were also clearly defined at that point.”

“His graduated succession and the transaction structure created an environment that allowed the new shareholders to grow the Company without excessive financial burden or constraints,” he added.

Acquisition of Upwardor Corp.

In June we completed a buy-side mandate, advising an entrepreneurial operator in his acquisition of Upwardor Corp., a leading Canadian manufacturer of sectional overhead doors, serving both the residential and commercial sectors.

“Historically the majority of our mandates are on the sell-side, however our approach and leadership provides significant value to entrepreneurs on acquisition files as well,” said Eric Waxman. “We work to position ourselves as the ‘transaction quarterback’ and push parties and advisors on all sides to keep things process-oriented”.

“It was a smaller deal being marketed by a big accounting firm, and these files can get overworked in these situations but we all focused on getting the deal done, with a view to a win-win scenario,” he continued.

Spara originated the Transaction and was retained to represent the acquirer in preparing, structuring, negotiating and closing the transaction which was being marketed in an auction process. Spara also arranged financing which was provided by TD Bank.

Current Mandate

We continue to progress a number of active mandates that we are either presently in market with, or are in the process of bringing to market, and would be pleased to discuss these with qualified financiers, investors or prospective acquirers:
 

  • Divestiture of a scalable and validated student information services (“SIS”) technology product focused on a significant and niche post-secondary student market.
  • Divestiture of a systems integration, cloud services product service business.
  • Shareholder buyout and equity recapitalization of a large North American full-service outdoor media business.
  • Divestiture of an Eastern Ontario construction business active in the heavy civil/infrastructure sector.
  • Divestiture of a Southwestern Ontario cereal grain processing and milling business for both the human and animal food sectors.
  • Add-on Acquisition Search mandate on behalf of a (US) Private Equity-backed Canadian portfolio company in the flooring distribution business.
  • Targeted Acquisition of an engineering services business focused on underground and on-ground power and utility assets.

Team Updates
We’ve had significant growth in our portfolio companies and a few new additions and changes to the team.

Spark Power Corp.

We have been growing our technician base within this organization and with the acquisition of Rondar Inc. we now have more than 50 of the best technicians in the country.
Total head count in this business is now at 75+ and we expect that to grow to well over 100 both organically and with the pending acquisition, currently under Letter of Intent.

Spara Capital Partners

Matt Mantin has been with us now for approximately six months and has recently been promoted to Analyst. Congratulations Matt!
Anthony Marotta has re-joined the office as part of the Spara Capital team, in conjunction with his cooperative studies at the Goodman School of Business at Brock University. Anthony had previously spent nearly a year as a co-op student with our Spark Solar business. Welcome back Anthony!

Visitors to our website will see the addition of a Careers section where we invite qualified candidates to share their resumes with us. We’re constantly looking to connect with good people at Spara and across our portfolio companies so please direct the talented people in your network to visit our site!

In Other News

ACG Capital Connection

The Official Date for the (12th Annual) ACG Capital Connection Toronto has been set as November 12, 2014 at the Allstream Centre.  Event Founder, Jason Sparaga will again co-Chair the event with Darin Brock from Torquest.

In addition, a number of the Spara team, who were instrumental in driving a revitalization effort of last year’s event, have returned to various organizing committees to continue to drive the momentum and expand the event.  The following video produced by Spara Capital on behalf of ACG Toronto, highlights key elements of the event:

Brock University Monster Pitch

For the second consecutive year, Spara Capital sponsored Brock University’s Business Plan “Pitch” Competition known as Monster Pitch.  As well, Jason Sparaga, President of Spara Capital and CBC’s Dragon’s Den “Dragon” Bruce Croxon who returned as celebrity judges were joined by Jim Treliving, Founder and CEO of Boston Pizza (and Bruce’s fellow “Dragon”) and Brock alumnus Deborah Rosati.

Congratulations to all participants and especially third year finance student, Johnathan Holland, ($tudent Currency Xchange) on an impressive win and a big thanks to Brock’s Entrepreneurial Club and the team at the Goodman School of Business at Brock for putting together a great event.  Watch the television coverage of the event here:

Save September 18th for the Unity For Autism Golf Tournament

For the fourth consecutive year, we are pleased to sponsor Unity for Autism’s Annual Golf Tournament taking place Thursday, September 18, 2014 at Copper Creek Golf Course in Kleinberg. In addition to financial contributions, each year we donate the entire Spara Capital and Spark Power team to assist Unity for Autism in organizing and operating this great event. Jason Sparaga is a Unity For Autism board member. For more information on the tournament or Unity for Autism visit www.unityforautism.ca.