Target Company Overview

AUA Private Equity Partners, LLC has successfully completed the sale of Water Lilies Food, LLC, a distinguished manufacturer of premium Asian cuisine. Situated in Bay Shore, New York, Water Lilies specializes in producing frozen appetizers, including popular items such as egg rolls, spring rolls, potstickers, and dumplings. Established in 1995, the company prides itself on its commitment to food safety, quality, and innovation, making it a reputable partner for major retailers, private label brands, and foodservice operators.

Over the past five years, AUA Private Equity has played a pivotal role in transforming Water Lilies from a family-operated business to a leading entity in the frozen Asian appetizer sector. The firm facilitated the construction of a new facility that tripled the company's operational footprint and enhanced its automation capabilities, leading to significant organic growth in both revenue and EBITDA, more than tripling their initial metrics.

Industry Overview in the United States

The frozen food industry in the United States has seen robust growth, driven by increasing consumer demand for convenience and a preference for high-quality, ready-to-eat meals. Asian cuisine, in particular, has gained popularity as consumers seek diverse flavors and dining experiences. This trend has positioned companies like Water Lilies favorably within the market.

The rise of food delivery services and a shift in consumer behavior have further accelerated the growth of frozen appetizers, which are seen as quick and convenient options for meals at home or on the go. In the competitive landscape, innovation in product offerings, such as healthier or more gourmet options, is critical for capturing market share.

Additionally, the increasing focus on health and wellness among consumers influences purchasing decisions, prompting manufacturers to invest in cleaner ingredient profiles and environmentally sustainable practices. Companies within the frozen food space, particularly those specializing in ethnic cuisines, are uniquely positioned to capitalize on these trends by emphasizing quality and authenticity in their offerings.

Furthermore, the COVID-19 pandemic has permanently shifted consumer habits, with many more individuals cooking at home and seeking frozen products as a reliable option. This change suggests a long-term positive outlook for the frozen foods sector, particularly for innovative brands like Water Lilies.

Rationale Behind the Deal

The decision to sell Water Lilies Food to Blue Point Capital Partners aligns with AUA Private Equity's strategy of partnering with family-owned businesses to foster growth and expansion. AUA's operational expertise and commitment to enhancing the company's capabilities have positioned Water Lilies for continued success and scalability, making it an attractive acquisition target.

This transaction allows Blue Point Capital to leverage Water Lilies' established market presence and operational improvements to drive further growth in the Asian appetizer category, thereby benefiting from both organic expansion opportunities and potential strategic acquisitions.

Investor Information

AUA Private Equity Partners is a lower middle-market investment firm based in West Palm Beach, Florida. The firm focuses primarily on operationally-driven investments in the consumer products and services sectors, with a strong emphasis on family-owned enterprises. AUA typically invests between $20 million and $75 million, targeting companies with EBITDA exceeding $5 million.

With an approach centered on strategic capital deployment and hands-on operational support, AUA has successfully nurtured its portfolio companies, facilitating their growth trajectories while delivering significant value to stakeholders.

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In my expert opinion, the sale of Water Lilies to Blue Point Capital Partners represents a strategic and promising move. AUA Private Equity's investment philosophy, which emphasizes collaboration with family-owned businesses to drive institutional growth, has proven effective in building Water Lilies into a leader in its niche. The development of the new facility and the tripling of operational capacity serve as strong indicators of the company’s potential for continued expansion.

Moreover, the frozen Asian food market is poised for sustained growth due to shifting consumer preferences toward convenient meal options, which enhances the attractiveness of this investment. Given Blue Point's experience and resources, they are well-positioned to take Water Lilies to its next level of success.

The strategic alignment between Blue Point Capital and the Lee family sets a foundation for successful collaboration. As both parties seek to build upon the solid groundwork laid by AUA, there is a high likelihood of realizing significant growth in the upcoming years.

Overall, this acquisition appears to be a well-timed investment that aligns with market trends, positioning Water Lilies for long-term success.

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