Arcapita Completes Varel Buyout

Arcapita has completed its $369 million acquisition of Varel Holdings Inc., a maker of drill bits for the oil & gas and mining industries, from KRG Capital Partners. KRG Capital bought Varel from 3i Group and UTIMCO in June 2005. It has since made several add-on acquisitions.

 

PRESS RELEASE
KRG Capital Partners (“KRG”), a Denver-based buyout firm, completed its previously announced sale of Varel International (“Varel”) to an affiliate of Atlanta-based private equity firm Arcapita, Inc. (“Arcapita”). The transaction is valued at approximately $369 million and closed on November 5, 2007. Varel is the world's fastest growing manufacturer of drill bits for the oil and gas, mining and industrial industries.

 

Headquartered in Carrollton, Texas, Varel produces polycrystalline diamond compact and roller cone bits for the oil and gas drill bit market, as well as roller cone bits for other mining and industrial applications. With operations and sales offices in 41 countries, Varel serves a broad range of national and multi-national oil and gas companies and generates 50 percent of its revenue outside North America.

 

“Varel's management team has done an excellent job executing our combined vision,” said Chuck Hamilton, Managing Director of KRG Capital Partners. “Their industry and operational expertise has allowed Varel to further penetrate the international drill bit market with significantly expanded manufacturing, product development and distribution capabilities. We would like to extend our thanks to them for all their efforts and wish them well in their new partnership with Arcapita.”

 

Arcapita's Stockton Croft, who led the deal for Arcapita, added, “We believe that Varel is well positioned for further growth, particularly in the important markets of the Middle East, where Arcapita's local knowledge and extensive contacts will be a major competitive advantage for Varel. We are looking forward to a close relationship with Varel's accomplished management team to fulfill this potential.”

 

About KRG Capital Partners

Founded in 1996, KRG is a Denver-based private equity firm with nearly $4 billion of capital either deployed or available for future investment, which includes approximately $600 million deployed since inception on behalf of equity co-investors. KRG specializes in acquiring and recapitalizing unique and profitable middle-market companies. The firm seeks investment opportunities for its partners where KRG can work in concert with owners and operating managers who are committed to expanding their companies and becoming industry leaders. The result is a partnership that focuses on creating a significantly larger enterprise through a combination of internal growth and complementary add-on acquisitions. For more information on KRG Capital Partners, please visit www.krgcapital.com .

 

About Varel International

Founded in 1947, Varel International is the world's largest independent manufacturer of drill bits. Headquartered in Carrollton, Texas, Varel services oil and gas, mining and industrial markets with its comprehensive suite of roller cone and fixed cutter drill bits. The Company employs 1,000 people and has manufacturing facilities in Carrollton, Texas; Houston, Texas; Matamoros, Mexico and Tarbes, France, as well as sales offices throughout the world. Varel's proprietary design capabilities, efficient manufacturing, and global sales force uniquely positions the Company to provide high-quality drill bits that deliver excellent performance and value to its customer base. For more information about Varel International, please visit www.varelintl.com .

 

About Arcapita

Arcapita Inc. is a wholly owned subsidiary of Arcapita Bank B.S.C.(c), which is a global investment firm with offices in Atlanta, Bahrain, London and Singapore, through which it sources investments for its corporate (private equity), real estate, asset based and venture capital lines of business. Arcapita's corporate investment line of business was founded in 1997 and operates out of Atlanta, London and Bahrain. To date, Arcapita has completed 63 transactions with a total value of almost $21 billion. More information on Arcapita is available online at www.arcapita.com .