6 PE deals for the movie industry; a road infrastructure deal; plus more Deals of the Year

Good morning dealmakers. Thank goodness it’s Good Friday!

To cap off the week, and hopefully a long weekend for some, I am looking at six PE deals in the movie industry that recently caught our attention here at PE Hub.

We also have a road infrastructure deal announced yesterday with Highway Supply LLC acquired by RoadSafe Traffic Systems, a portfolio company of Investcorp and Trilantic North America. I will sign off with highlights from the recently announced Deal of the Year winners in the international and the small market categories.

Private equity goes to the movies
The emergence of streaming platforms as a viable alternative to movie theaters at the height of the pandemic left a lasting imprint on the sector, making multiplatform entertainment especially alluring for private equity, reports my colleague Iris Dorbian.
Back in 2021, through its media rollup Candle Media, Blackstone capitalized on the phenomenon that’s transforming content by acquiring a wide array of Hollywood production companies, most prominently Reese Witherspoon’s Hello Sunshine. Since then, quite a few buyout shops have jumped into the fray, investing in everything from a new production company co-founded by Ben Affleck and Matt Damon to a content studio focused on people of color.

Late last year, KKR led a $400 million investment in Skydance Media, producer of the box office mega-hit and Oscar-nominated movie, Top Gun: Maverick. The CEO of Skydance is David Ellison, son of Oracle co-founder Larry Ellison, and the Ellison family is the majority shareholder, with other investors including RedBird Capital Partners and Tencent.

“We are delighted to invest behind Skydance, David Ellison and the impressive, differentiated team of creative and entrepreneurial talent he has assembled,” said Jenny Box, a partner and co-head of KKR’s strategic group. The funding put Skydance at a valuation of over $4 billion.

Last month, BlackRock Alternatives spearheaded an over $90 million investment in Macro, a TV and film company focused on telling stories about people of color. HarbourView Equity Partners and Goldman Sachs Asset Management also participated in the round.
Launched in 2015 and founded by CEO Charles D King, Macro has made 16 feature films and two TV shows, garnering fifteen Oscar nominations and three wins. Among its projects are the Oscar-nominated film Judas and the Black Messiah and the recently wrapped film Freaky Tales, directed by Capital Marvel helmers Ryan Fleck and Anna Boden and starring The Last of Us heartthrob Pedro Pascal.

Pam Chan, chief investment officer & global head of BlackRock’s alternative solutions group, cited Macro’s success, coupled with its storytelling focus, “which has historically been short in supply but in demand” as two key reasons for the investment.

Traffic Control
Yesterday, RoadSafe Traffic Systems, which is backed by Investcorp and Trilantic North America, acquired Highway Supply LLC, a provider of traffic control products and services based in Albuquerque, New Mexico.

RoadSafe is a provider of traffic control and pavement marking services. This acquisition is the ninth since the company entered into a strategic partnership with private equity firms Investcorp and Trilantic North America in 2021.

RoadSafe described the acquisition of Highway Supply as an extremely attractive opportunity for the company. “Its operations mirror RoadSafe’s core functionalities of traffic control services, product sales and pavement marking capabilities,” said Dave Meirick, CEO of RoadSafe who sees the deal as a way to expand his company’s footprint into the New Mexico market.

Deals of the Year
International winner: Earlier this week, New York-headquartered JC Flowers was announced as the winner for the international category of the Deal of the Year by affiliate Buyouts.

When the firm acquired the UK’s Interactive Investor in 2017, its number one priority was to boost scale to help turn around the struggling online retail investment platform into an efficient, profitable and competitive player in the sector, Tim Hanford, co-president of JC Flowers and managing director in charge of the firm’s Europe operations told me in an interview.

After a four-and-a-half-year hold period, the firm received just over $900 million of proceeds from invested capital of $100 million after the sale to Abrdn. Despite a highly competitive market space, Interactive Investor grew from a loss-making enterprise to a platform with more than 18 percent of the ­direct-to-consumer market share.

According to sources familiar with the transaction, JC Flowers received a gross multiple of approximately 9x its invested capital.

“We saw an opportunity to create a scaled player through a combination of organic growth and the consolidation of struggling smaller players,” said Hanford.

Small market: Blackford Capital, a Grand Rapids, Michigan-headquartered firm scooped this category after transforming the family-run Quality Aluminum Products (QAP), a building products company that it acquired in 2016.

QAP is headquartered in Hastings, Michigan, with a second location in Flat Rock, Michigan. The business – which manufactures aluminum and steel products that include soffits, fascia, trim coils, aluminum siding and more – was founded by brothers George and Bob Clark in 1990 after nearly 50 years of experience in the building products industry.

“This was a family-run operation. The company did not have a CFO and they would supply a lot of their financial records to a local accountant. We needed to spend a lot of money bolstering the financial infrastructure of the business,” says Jeff Johnson, managing partner at Blackford.

QAP tripled its revenue under Blackford’s ownership, grew earnings five-fold, almost doubled its workforce and created an interesting enough investment opportunity to attract a strategic acquisition from a billion dollar publicly traded company.

Under Blackford’s ownership, 100 percent of the company’s growth was organic.

That’s it for me today. You can reach out to me at obey.m@peimedia.com.

MK Flynn will be back with the Wire on Monday.

Have a great weekend.

Cheers,

Obey