Platinum Equity made a play into the immigration services sector last week, acquiring Ashburn, Va.-based government contractor FCi Federal for an undisclosed sum through its PAE portfolio company.
The deal is the first bolt-on acquisition made by Beverly Hills-based Platinum made through PAE, a logistics and stability operations, technical services, and national security services business it bought last year for a reported price of around $900 million, including debt, from New York private equity firm Lindsay Goldberg.
FCi generated $160 million in 2015 revenue, which was projected to grow to $225 million last year, according to a profile in the Washington Business Journal. The company employs more than 5,000 people.
Louis Samson, a Platinum partner, said in a statement that the acquisition would help nurture PAE’s core government contracting business as part of its growth strategy.
“The addition of FCi will expand PAE’s service offering and bring together a lot of very talented employees,” Samson said. “We are delivering on our promise to invest in PAE’s long-term strategy and will continue looking for new opportunities to expand organically or through additional acquisitions.”
FCi does a variety of government contracting work, but its largest account is a five-year, $416 million contract with the United States Customs and Immigration Services wing of the Department of Homeland Security signed in January of last year. FCi provides processing and background-check services for certain immigration hubs through the contract. The company has been listed as one of the fastest-growing companies in the United States by Inc. magazine for five straight years.
PAE Chief Executive John Heller said in a statement that FCi’s growth record made it a naturally attractive target, but the companies aligned strategically and culturally as well.
“FCi is an impressive company with a strong track record for growth driven by talented employees and exceptional customer service,” Heller said. “It’s a great strategic fit, presenting new opportunities for both of our companies. It’s also a strong fit culturally, as I know FCi and PAE share the same core values and commitment to the highest performance standards.
While no details about the FCi transaction were disclosed, Tom Gores-led Platinum has leveraged PAE with high debt since it bought the firm last year, according to reports from S&P Global Ratings and Moody’s Investor Services Inc. PAE issued $725 million in new debt in September to pay off old debt and dole out a $180 million dividend to Platinum.
FCi is the first add-on for PAE under Platinum, but the company has been an active buyer since it was spun off to Lindsay Goldberg from Lockheed Martin Corp. in 2011 for a reported $350 million. The company has added carve-outs from Computer Sciences Corp. and US Investigations Services, as well as the full-company acquisitions of Defense Support Services and A-T Solutions, over the past six years.
Houlihan Lokey acted as FCi’s financial adviser on the deal.
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