CHICAGO -- The new owners of Roundy's like what they got.
cash-flow structure, great customers and a lot of growth opportunities, plus the possibility of being the preeminent player in Wisconsin and regionally," Avy Stein told SN.
Stein is one of the managing partners of Willis Stein & Partners, the Chicago-based private equity investment firm that acquired Roundy's last June for an undisclosed amount.
Stein said his company expects to invest "well in excess of $250 million" in Roundy's over the next few years -- "substantially more than has been invested in the past," he noted -- "as well as the capital the company itself will generate."
The money will go for store acquisitions and remodelings, distribution center upgrades and other capital needs, Stein said.
Roundy's new owners plan to be patient as they watch their investment grow, Stein told SN.
"We're very focused on adding stores and increasing Roundy's share in the Wisconsin market," he explained. "We're not sure about expanding our share outside Wisconsin at this point. We want to take care of first things first.
"But we believe we have a great management team that's clearly able to handle additional acquisitions and growth beyond Roundy's, though at this point we're not looking for any major acquisitions in the wholesale business.
"We're happy with the [wholesale] business we have and intend to grow that along with our corporate-store base."
Willis Stein & Partners, which was formed in 1995, has investments in nearly 20 middle-market companies in the fields of publishing, business services, information technology, telecommunications, manufacturing and health care.
The investment in Roundy's marks its first venture into the food industry.
"We'd been looking at potential investments in food companies for two or three years, but prices were too high in the past and we felt it didn't pay," Stein explained. "More recently, however, prices have been more reasonable and they match the economic value [of the properties] more closely."
What Willis Stein looked for in the food industry, he said, "were opportunities with really valid regional competitors at the right price. Eventually, the multiple at which companies were trading came down substantially so we were able to find the right company at the right price."
At the time of the Roundy's purchase, Stein told SN the transaction would serve as a platform for other food industry investments. That's still the goal, he said.
"We're looking at other investments, and if it's anything closely related to the Roundy's business, we would do it with the Roundy's management team. But we're also looking at food manufacturing investments, though anything we do in the retail food area would be done with this management team."
Willis Stein & Partners sees food distribution as a localized business. "A lot of people focus on the food business as it's a national business. But we look at it as being more regional, and Roundy's is a very strong regional franchise. That's what makes it so attractive and profitable."
