Member Spotlight: Q&A with HCI Equity Partners

Tell us about HCI Equity Partners
HCI is a lower middle market private equity firm focused on partnering with family and founder owned businesses in the defense, distribution, manufacturing and…

Tell us about HCI Equity Partners

HCI is a lower middle market private equity firm focused on partnering with family and founder owned businesses in the defense, distribution, manufacturing and technical service markets. HCI makes majority investments in businesses within North America in large, fragmented markets with a specialty in transformational consolidation strategies. The firm has substantial operating experience and takes an active approach in supporting each portfolio company’s growth plan to build long-term value. HCI has just under a billion dollars of assets under management and is headquartered in Washington, DC.

Why did you join the AIC?

We believe that lower middle market private equity serves as a critical partner to support America’s entrepreneurs and family business owners as they navigate issues such as generational succession and access to growth capital.  In today’s times of rapid technology innovation, dynamic supply chains and ever changing competitive landscape, entrepreneurs need access to capital and capable business partners more than ever.  We joined AIC to ensure this story is being effectively communicated and policy makers are aware of the important contributions that lower middle market private equity makes to America’s business owners.

What is one of the investments you are most excited about and why?

MSI Express is a leading provider of contract packaging and contract manufacturing services, primarily for well-known CPG brands in the liquid and dry food space. MSI has grown rapidly, completing three add-on acquisitions in 3 years and is now a proven consolidation platform with a large pipeline of acquisition targets. MSI has developed and implemented the “MSI Express Way” which allows for rapid scaling and continuous improvement by using robust data analytics, tools and processes. Since HCI’s initial investment, the Company’s revenue has grown almost 1100%, and headcount has increased by over 350% supported by over $80M in organic growth investments.

We are equally as proud of the strong commitment to sustainability MSI has had during our ownership period. MSI recently implemented a common ERP system across all its facilities and uses KPIs to drive out waste which led MSI to recycle nearly 100 tons of plastic annually.  MSI is also one of the national leaders in manufacturing powdered drink mixes in a flexible stick format. The Company’s internal analysis shows a stick pack put into a reusable bottle saves 85% of the carbon versus a recycled plastic bottle eliminating over 62,000 tons of carbon per year which if the equivalent of pulling 13,500 cars off the road.

HCI still sees a long runway of growth, both organically and through acquisition for MSI and looks forward to building a bigger, better business in partnership with the  management team.