NOVACAP and institutional partners announce an investment of more than $165 million in the acquisition and development of Québec company KDC

NOVACAP, a Canadian leader in the private equity field, is partnering, through its NOVACAP Industries IV investment fund, with institutional partners, including the Caisse de dépôt et placement du Québec, the Fonds de solidarité FTQ, Investissement-Québec, Export Development Canada (EDC) and Fondaction CSN, to announce an investment of more than $165 million in the shareholding of KDC, a leading Québec contract manufacturer of health and beauty-care products.

KDC has its head office in Knowlton, Québec, where its main plant is also located. In addition, KDC has plants in Mississauga, Ontario, as well as in Lynchburg, Virginia, and Columbus, Ohio. Altogether, the company employs 2,200 people, including nearly 900 in Knowlton.

KDC is already linked to NOVACAP through its NOVACAP II Fund, which has owned it since 2002. This initial investment and NOVACAP’s continuing involvement in KDC’s development have enabled KDC’s annual sales to rise from $60 million to a forecast $500 million this year. During this time, NOVACAP and its partners have invested more than $140 million in KDC’s development, to make the company a key North American player in vertically integrated manufacturing for the health and beauty-care industry. These investments included the construction of a technologically leading edge $58 million plant in Colombus.

With the support of its shareholders, KDC plans to implement an ambitious growth plan that will position it as a first-choice partner for brand owners around the world in the field of beauty- and personal-care products, aiming for the billion-dollar mark in annual revenues within a few years.

Through complementary acquisitions, expansion of services and development opportunities abroad, KDC plans to double its production by 2018 and become the leader in its industry, while remaining the only North American player with the critical mass needed to play a major role internationally.

“To deal with the many and complex challenges of the global marketplace, Fortune 500 companies are working increasingly in partnership with suppliers that have the size, background and entrepreneurial spirit to serve all their brands and markets,” says Michel Côté, KDC Chairman and NOVACAP Senior Partner. “NOVACAP’s strategy consists of leveraging KDC’s unique business model as a global supplier of manufacturing solutions and capitalizing on its competitive advantages. With clear goals and calculated dynamics for success, we strongly believe that KDC is among the companies best positioned to develop new markets and meet this growing demand.”

Christian Dubé, Executive Vice-President, Québec, of the Caisse de dépôt et placement du Québec, says: “At a time of strong global competition in the manufacturing sector, this transaction reflects our strong intent to support Québec companies in their development and their national and international expansion.”

Janie Béïque, Senior Vice-President, Industry, Entertainment and Consumer Goods, at the Fonds de solidarité FTQ, notes: “By investing again in KDC with its partners NOVACAP, La Caisse and Investissement Québec, the Fonds is helping solidify a Québec head office and consolidating jobs. Together, we allow this Quebec company to continue its international momentum.”

For his part, Jacques Daoust, Québec Minister of the Economy, Innovation and Exports, says: “KDC’s development is a perfect illustration of one of the government’s economic priorities, which is to support the growth of companies that create wealth in the regions. In addition, the role of Investissement Québec in this transaction demonstrates more than ever the desire of our government to act as an investment partner in projects with excellent economic benefits.”

KDC has grown rapidly through consistent investment and focus on international growth opportunities”, said Nathan Gibb, Senior Investment Manager at EDC. “The company is well positioned to become a global leader in its industry, and we are very pleased to work with management, our long standing partner NOVACAP, and the other investors, to support KDC’s international growth strategy”.

ABOUT NOVACAP

With $1.5 billion of assets under management, NOVACAP is one of Canada's leading private equity firms. Since 1981, its distinct partnership approach based on operational expertise has helped more than 50 companies accelerate their growth and maximize their value. NOVACAP ranks among the top private equity firms in North America. The results of NOVACAP I and NOVACAP II rank NOVACAP in the first quartile of the funds classified by Thomson Venture Economics. For more information, please consult: www.novacap.ca.

ABOUT LA CAISSE DE DÉPÔT ET PLACEMENT DU QUÉBEC

La Caisse de dépôt et placement du Québec is a long-term institutional investor that manages funds primarily for public and parapublic pension and insurance plans. As at June 30, 2014, it held $214.7 billion in net assets. As one of Canada’s leading institutional fund managers, La Caisse invests in major financial markets, private equity, infrastructure and real estate, globally. For more information: www.cdpq.com.

ABOUT INVESTISSEMENT QUEBEC

Investissement Québec’s mission is to foster the growth of investment in Québec, thereby contributing to economic development and job creation in every region. The Corporation offers businesses a full range of financial solutions, including loans, loan guarantees and equity investments, to support them at all stages of their development. It is also responsible for administering tax measures and prospecting for foreign investment. For more information: www.investquebec.com.

ABOUT EXPORT DEVELOPMENT CANADA

EDC is Canada’s trade finance agency, providing financing and insurance solutions locally and around the world to help Canadian companies of any size respond to international business opportunities. As a profitable Crown corporation that operates on commercial principles, EDC works together with private- and public-sector financial institutions to create greater capacity for Canadian companies to engage in trade and investment. For more information about how EDC can help your company, visit www.edc.ca.

ABOUT THE FONDS DE SOLIDARITE FTQ

The Fonds de solidarité FTQ helps drive our economy. With net assets of $10.1 billion as of May 31, 2014, the Fonds is a development capital fund that channels the savings of Quebecers into investments in all sectors of the economy to help create and maintain jobs and further Québec’s development. The Fonds is a partner, either directly or through its network members, in more than 2,450 companies. With 613,958 shareholder-savers, the Fonds helps create, maintain and protect more than 172,000 jobs. For more information, visit www.FondsFTQ.com.