AWARD SPOTLIGHT: Novacap ‑ Winner of CVCA's 2022 PE Regional Impact Award for Eastern Canada for Gestion Groupe Master Inc.
When Louis St-Laurent and his two business partners bought Gestion Groupe Master Inc. (The Master Group) in 1991, it was with a vision that air conditioning would become a hot industry.
The Boucherville, QC. ‑based company, which began as a family-run business in 1952, had expanded from refrigeration into air conditioning, but St-Laurent and his partners Alain Fournier and Michel Ringuet saw even more growth in the broader heating, ventilation, and air conditioning and refrigeration (HVAC‑R) industry.
They started making acquisitions across the industry, buying 17 companies to date, making it a cross-country business.
When private equity firm Novacap first invested in the company in 2014 it had 21 branches and $270M in sales. Today the company has about 70 branches and more than $1B in revenues, with a goal to double the size of the business in the next five years amid increased focus on HVAC‑R amid the pandemic.
St-Laurent says the growth will be driven in part by the acquisition in December of Virginia-based Value Added HVAC Distributors (VAD), its first acquisition in the U.S. the deal includes VAD and its three subsidiaries, Virginia Air Distributors, Allied HVAC Distributors, and South Carolina Air Distributors.
“We feel that there’s still $300M to $400M of growth possibilities in Canada, and the rest of the growth is going to come from the United States,” says St-Laurent, CEO of the company.
Following the U.S. acquisition, Novacap announced, through the participation of Novacap Industries V and a dedicated continuation vehicle, that it was doubling down on its investment in The Master Group by acquiring a majority interest in the company. It was the second private equity continuation vehicle for Novacap, which said the total capital raised to support the growth of The Master Group stands at $1.1B.
The continuation vehicle, whose lead limited partner is the Vintage Funds within Goldman Sachs Asset Management, included participation from several additional key institutional investors including Fonds de Solidarité FTQ, Fondaction, Portfolio Advisors, Lexington Partners, Blackstone Strategic Partners, Whitehorse Liquidity Partners, and iA Financial Group, among others. Today, Novacap owns 70% of the business, while management owns the other 30%.
The deal was awarded the CVCA’s PE Regional Impact Award for Eastern Canada.
Over the years, The Master Group has grown to become the largest HVAC‑R distributor in Canada. The company has created 750 jobs in the past eight years and 1,300 since the company’s inception.
Jean-Francois Routhier, senior partner at Novacap, says his firm partnered with The Master Group eight years ago, when it was essentially a regional player in eastern Canada, including parts of Ontario, Quebec, and the Maritimes.
‘’We met a great team and great entrepreneurs. They had an ambitious plan: to become a national distribution company, with a coast-to-coast footprint, and eventually expand into the United States. Today, we have successfully completed our national expansion and begun our rollout in North America. About two-thirds of the growth was achieved organically, with the remainder coming from acquisitions,” Routhier adds.
Having led the company’s operations for three years through early 2020, he confirms that the success story of The Master Group is written by its people.
“Being close to the operations gave me a very good sense of the company, the market, and the capabilities of the team, and gave Novacap the confidence to increase its investment in Master,” he says.
‘’We are determined to build a North American leader with strong Canadian roots. This is a great source of pride and motivation for me and the Novacap team.’’