Captain D's is reeled in by venture firm

Charlesbank Capital Partners and Grotech Capital Group are acquiring Nashville-based fast food fish chain Captain D's Inc. The deal value could not be determined, but the sponsors are arranging $100 million in senior bank debt for the buyout, implying that the deal could be worth at least $150 million.

Officials from Charlesbank Capital, a Boston private equity firm, declined to comment until the deal closes. That is expected by year's end. Grotech Capital, a Timonium, Md.-based investment firm, did not immediately return calls, while attempts to reach Captain D's public relations representative were unsuccessful. Captain D's 587 franchised restaurants in 24 states serve a trove of fried fish, shrimp and chicken-based dishes. In addition, they offer french fries, hush puppies and health-oriented platters. Wachovia Securities is syndicating the $100 million of bank debt. Captain D's opened its first eatery in Donelson, Tenn., in 1969. The company is now growing aggressively, according to information on the Internet franchise site Bison.com. Captain D's average site had sales of more than $900,000 in 2003, according to Bison.com.

Captain D's marks the latest in a string of restaurant franchiser businesses that private equity firms have bought in 2004. In early November, Atlanta private equity firm Crescent Capital Investments agreed to buy fried chicken chain Church's Chicken from AFC Enterprises Inc. for $390 million in cash; in May, New York-based Castle Harlan Inc. agreed to acquire Burger King Corp.'s San Juan-based fast-food restaurant chain, Caribbean Restaurants LLC for $340 million from Oak Hill Capital Partners LP of Fort Worth and American Securities Capital Partners, a New York buyout firm. "There's a great opportunity in niche consumer restaurants and other franchises for private equity firms to expand the businesses with less capital outlay than trying to fund a build out on a standalone basis," said Barry Curtis, national managing partner of private equity at Deloitte.

Captain D's will be Charlesbank's second investment in a restaurant franchiser this year. In June, the firm recapitalized Papa Murphy's International, Inc., a Vancouver, Wash.-based take-and-bake pizza chain whose outlets are largely franchised, for undisclosed terms.