CHICAGO, IL (BRAIN)—SRAM has struck a new equity partnership with Lehman Brothers Merchant Banking (LBMB), one of the seven asset classes of Lehman Brothers' global private equity business.
The deal is expected to close in late September.
The partnership is the result of an extensive process through which SRAM has sought a strategic financial investor to support its continued growth in the global bicycle components industry. LBMB will be a minority investor in SRAM. SRAM senior management will continue to lead the company.
Headquartered in Chicago, with product development and manufacturing facilities in California, Colorado, Indiana, Taiwan, China, Germany and Portugal, SRAM produces a full line of high performance bicycle components for original equipment manufacturers and independent bike dealers. The company markets its products under the SRAM, RockShox, Avid, Truvativ and Zipp brand names. With more than 20 years serving the bike industry, SRAM expects 2008 revenues to approach $500 million.
“The SRAM team has done a great job building a global organization in an exciting industry,” said Stan Day, chief executive officer of SRAM. “We have now achieved scale where we believe it is prudent to add an experienced institutional investor to our shareholder base. We are very pleased that LBMB is committing its capital and expertise to SRAM.”
“SRAM has grown to become a true leader in its industry without losing touch with its entrepreneurial roots and its core values,” said Charlie Moore, LBMB managing director. “We are privileged to partner with Stan Day and the SRAM management team as they build on the company’s strong momentum in the bicycle components market.”
In connection with the transaction, the company is establishing the SRAM Cycling Advocacy Fund. The fund, initially capitalized with $10 million, will support advocacy in the United States, Europe and Asia on policy issues affecting cycling infrastructure and the bicycle industry. These funds will be paid out approximately $2 million per year for five years. SRAM will seek advice from leading industry associations like Bikes Belong on proposal evaluation and fund distribution and expects to have a grant request process in place by November.
“Bikes are a constructive transportation and recreational solution. Governments everywhere are recognizing their value to address traffic congestion, environmental concerns, health promotion and high gas costs. The fund will support grass roots advocacy efforts focused on improving cycling infrastructure,” Day said.
“With market leadership comes responsibility,” Moore said. “We are pleased to see SRAM establishing the SRAM Cycling Advocacy Fund, which will give the industry a vehicle to highlight issues of importance to the cycling public.”