Patoka Capital

Jul 03, 2017

Xscape Theatres owner adds Tennessee manufacturer to $200M portfolio

By Marty Finley  – Reporter, Louisville Business First

A New Albany-based private investment firm continues to diversify its portfolio with the purchase of a Tennessee company.

Patoka Capital LLC has acquired Murfreesboro-based Cyber Sciences Inc., which makes precision timing products that help control and monitor electrical distribution systems for data centers, hospitals and other critical power facilities. The deal closed June 30, and financial terms were not disclosed.

Cyber Sciences was founded by Lee Wallis, who will continue to oversee the engineering side of the business, said Patoka Capital CEO Chance Ragains.

Ragains said Patoka plans to bring in a new president to lead the company into the future, though that person has not been identified.

"The Cyber Sciences management team is excited to work with Patoka Capital in the company’s next phase of growth," Wallis said in a news release regarding the deal. "Through this partnership, we have increased conviction that Cyber is in a position to benefit from the increased investment in cloud infrastructure, the internet of things (IoT), power reliability and energy security."

According to the release, Cyber Sciences' products enable electrical equipment manufacturers to offer monitoring services for their customers in areas such as GPS time synchronization and sequence of events recording.

With the deal, Patoka Capital has grown the capital value of its portfolio to $200 million.The company also owns the Xscape Theatres movie theater chain, which has grown to five locations in Louisville; Cincinnati; Howell, N.J.; Brandywine, Md.; and a suburb of Tampa, Fla. And it owns a majority share in the Wild Eggs restaurant concept, which has grown to more than a dozen locations. Ragains said Wild Eggs has added three Indianapolis-area locations and will have three Cincinnati-area locations operating by August, when the third location opens at Great American Tower.

With its purchases, Patoka looks for long-term value by acquiring and scaling businesses with up to $10 million in earnings before interest, tax, depreciation and amortization (EBITDA).

That means Patoka is not looking for turnaround opportunities instead seeks already-successful companies that can grow even more with Patoka's assistance, Ragains said.

"We like niche business with a lot of upside, and this definitely fits the bill," Ragains said of Cyber Sciences, which has about 20 employees.

Ragains, who declined to disclose Patoka's annual revenue, said the company searches in the region for investment opportunities, saying the St. Louis, Indianapolis, Cincinnati and Nashville markets are all attractive in terms of acquisition targets.

"We gave [Cyber Sciences] a special look because it's close to home," he said.

Patoka Capital was represented in the transaction by Louisville law firm Bingham Greenebaum Doll LLP and Louisville accounting firm Mountjoy Chilton Medley LLP.