Kelly Capital, a local private equity fund, sold its largest company, National Linen & Uniform Service, last month to a private Salt Lake City company in the business.
The sale of NLUS to Alsco Inc., combined with several, smaller transactions this year by Kelly, resulted in the firm generating $250 million in revenue this year, said Michael Kelly, chairman and chief executive.
Citing a confidentiality agreement, he declined to reveal the sale price for NLUS.
Kelly said his firm’s strategy is to buy what he considers sound businesses operating in growing regions, install new management, boost sales and earnings and then put the business up for sale.
Kelly acquired NLUS in 2003 as part of its $112 million purchase of National Service Industries Inc., an Atlanta-based company.
Kelly sold off Atlantic Envelope Co., another unit of National Service Industries, this year to National Envelope, the nation’s largest envelope manufacturer, for $70 million.
The firm’s recent sales are part of a liquidation strategy intended to take advantage of the gradual economic downturn, said Kelly.
“We think the economy and the market is on a down trend so we’re creating as much liquidity as we can, so we can take advantage of opportunities next year,” he said. “I’d say about 75 percent of our assets are in cash and securities now.”
NLUS was the largest entity controlled by Kelly Capital. Founded in 1919, the company has annual revenue of about $150 million and 2,500 employees.
With 16 plants primarily in the Southeastern part of the nation, the firm counted 16,000 customers, ranging from small restaurants to some of the nation’s largest corporate chains, including the Cheesecake Factory, HCA Hospitals, Hyatt Hotels and Outback Steakhouse.
Kelly Capital has three major partners: Michael and brother Richard, plus longtime friend Nick Spriggs.
Kelly Capital, which also owns the Bitter End Bar in the Gaslamp Quarter of San Diego, is in the process of rebuilding a single-room occupancy hotel nearby that it acquired in 2002 for $8 million.
The Ivy Hotel, with 159 rooms, would be the area’s first five-star establishment, Kelly said.
“When it’s completed later this year, we’ll have spent about $80 million on it, including $30 million of our equity,” Kelly said.
