Hydrofarm, LLC


“Hydrofarm is independently owned and is one of the nation’s leading wholesalers and manufacturers of hydroponics equipment and commercial horticultural products, including high-intensity grow lights, climate control solutions, and growing media. With an emphasis on excellent customer service, Hydrofarm has nine distribution centers across North America to best serve the growing needs of its customers.” -Press Release

“Hydrofarm, Inc. manufactures and distributes indoor gardening and hydroponics products under the brand names, which includes Phantom, Raptor, Quantum, Digilux, Daystar, Autopilot, Xtrasun, Active Air, Active Aqua, Active Eye, Jump Start, Radiant, Agrobrite, GROW!T, Phat, and oxyCLONE. Its products include lighting equipment, such as grow light reflectors, grow light ballasts, LED lighting, fluorescent lighting, grow light bulbs, and lighting accessories; and hydroponics, including hydro systems, hydro components, meters and solutions, pumps and irrigation, water filtration, pots and containers, and tents and tarps. The company provides climate control equipment, which includes controllers, ventilation and air purification equipment. In addition it also provides seeds, nutrients and additives, plant care, food storage products, and garden accessories. Hydrofarm, Inc. was founded in 1977 and is based in Petaluma, California with additional locations in Portland, Oregon; Santa Fe Springs, California; Denver, Colorado; New Hudson, Michigan; Fairless Hills, Pennsylvania; Medley, Florida; and Langley and Cambridge, Canada”. Bloomberg

Corporate Highlights

4/11/2019: New President hired.

1/14/2019: New Chief Executive named.

11/1/2018: Private equity group invests $55mn, including Serruya Private Equity.

11/2017: Hydrofarm acquired Eddi’s Wholesale and the distribution division of Greenstar Plant Products, Inc., the #1 and #2 Hydroponics and Lawn & Garden distributors in Canada, respectively. Hydrofarm believes numerous opportunities exist for further acquisitions in a fragmented market.

7/10/2017: Serruya Private Equity invests in the Company.

“We are very pleased to partner with Serruya Private Equity, which has a proven track record and a history of successfully investing in and building businesses. SPE has worked with both public and private companies to accelerate their growth,” commented Chief Executive Officer of Hydrofarm, Peter Wardenburg. “It is the ideal time to add financial resources and experienced partners to our team, as we see the use of hydroponics at an inflection point where both commercial and private use are poised to accelerate. This partnership also provides us with the financial flexibility to acquire complementary assets that can grow our platform and accelerate our growth.”

“The global hydroponics market value is anticipated to grow from $19.95 billion in 2015 to $27.33 billion in 2020, according to Research and Markets.  Hydrofarm is well positioned to serve this growing specialty retail and online market from seven nationwide distribution centers strategically located across the country that allows for expedited order fulfillment”.

5/2017: Company sold.

BDC Credit Reporter View

4/11/2019: Obviously, there’s plenty of intrigue going on behind the scenes since we last wrote as the Company has raised new capital; been forced to pay a higher interest rate (which implies some kind of default); brought in both a new CEO and a new President. Something has gone wrong with the Company’s ambitious industry roll-up plans. That seems to be reflected also in the valuation of the senior secured debt, discounted as much as 30%. That’s high for senior secured and implies serious problems. More than that we do not know as the 3 BDCs involved have not been saying anything. CGBD has the biggest exposure at $20mn, with Main and sister non-traded BDC HMS Income with $7mn each. There’s a lot of capital backing this hydroponics-marijuana play, which is good news for the senior lenders. Nonetheless, this investment requires close monitoring.

10/9/2018:  Given the June 2018 investment in a new $4.0mn distribution facility and a new marijuana-distribution focused strategic partnership that began in August 2018, we are not unduly worried about the Company, notwithstanding the IIQ 2018 unrealized write-down by its BDC lenders, which caused Hydrofarm to be added to the Watch List, but only at the top thereof: CCR 3.


IVQ 2018: Debt valued at (20% – 30%) discount.  Downgraded to CCR 4.

IIIQ 2018: Pricing increased from LIBOR + 700bps to LIBOR + 1000bps.

IIQ 2018: CGBD discounts the debt by (19%). The other BDCs value at (9%) discount. Added to Watch List as CCR 3.

IIQ 2017: Three BDCS: MAIN, CGBD and HMS Income invest $32mn in 20222 senior secured debt.