MY BIGGEST DEAL Genstar finds a fit among the ashes of housing’s collapse

Dec 01, 2007 | 01:09 PM |

The slumping residential construction market is helping spur consolidation among downstream metal operations. For private equity firm Genstar Capital LLC, that spells one thing opportunity.

In April, the San Francisco-based company paid $228 million for International Aluminum Corp., a producer of residential and commercial building materials. The timing of the acquisition, which came in the midst of a 20-percent downturn in the residential building market in the first half of the year, was no accident, according to Genstar managing director Darren J. Gold.

"It was a good time in the cycle to buy," he said. "We believe in buying toward or at the bottom of a cycle and taking a long view with our portfolio companies. We're patient capital. We have the luxury of taking our time and working with our companies." Given that Genstar has held on to some of its acquisitions for as long as 12 years—although it sold others as soon as two years after buying them—it might well be in for the long haul.

Genstar saw International Aluminum as an undermanaged business in a sector with growth potential, Gold said. "We have a strong belief in the residential market, and companies going through tough times have tremendous potential. Our view of the residential sector is that we have hit bottom or near bottom, but the real question is, how long until it turns back up?" ....