Apr 24, 2006 | David Carey, The Deal

Wentworth Deal Pays Off for JLL

J.G. Wentworth Inc., which New York private equity firm JLL Partners Inc. bought last July, has undergone a $225 million dividend recapitalization that enabled JLL to recoup its original equity investment and then some, JLL managing director Frank Rodriguez said.

The deal, completed in mid-April, came two months after JLL recapped another portfolio holding, window maker PGT Inc. To date, the firm has retrieved 78% of its PGT investment.

In Wentworth, it originally put tip $125 million for a 70% equity stake, Rodriguez said. The Bryn Mawr, Pa.-based concern is the biggest purchaser of structured settlements in the U.S., offering cash up front to people who win or settle medical or injury lawsuits.

Rather than taking the cash in installments. customers get a discounted lump amount. Wentworth collects all of the installment cash itself, banking the difference as profit.

According to Rodriguez, JLL has earned hack $166 million, or slightly over 1.3 times its nine-month-old investment in Wentworth. That figure includes cash from the April dividend as well as previous ordinary dividends. The $225 million recap loan, which Deutsche Bank AG and Bear, Stearns & Co. arranged, is the only permanent long-term debt that Wentworth carries.

“The [internal rate of return] to date is 48%, and we still own the same percentage of the company we owned before,” he said.

Rodriguez would not quantify revenue or Ebitda, although he said the latter has shot up by close to 30%.

“The company continues to gain market share, and the structured settlement market itself is growing,” he said, adding that stepped-up TV advertising has boosted awareness of Wentworth.

Law firm Reed Smith LLP advised Wentworth on the recap.

In February, JLL similarly leveraged up PGT lnc., a North Venice, Fla.-based maker of storm-resistant windows and doors, to hank a dividend. JLL has made back about $98 million of its two-year-old, $125 million investment in PGT. In March, PGT filed with the Securities and Exchange Commission to go public.