AEA to exit Spectrum Plastics Group, KKR’s Global Impact team invests in CoolIT Systems

Morning Hubsters!

All kinds of compelling content coming out of the PEI world this week. If you haven’t read our Q&A with Apollo’s two co-heads of private equity in Buyouts, check it out. They talk about opportunities they’re seeing in the market and how they are positioned to take advantage. As well, we have Private Equity International’s Future of Private Equity report, with its lists of leaders in dealmaking, fundraising, investors and operations.

Exit: We have a big exit in the PE world – a strategic buyer is picking off a portfolio company, which, you might say, is a pretty routine kind of thing to happen in PE. But these days, it’s significant! How are GPs finding exits? Well, here’s one way:

AEA Investors agreed to sell Spectrum Plastics Group to DuPont for $1.75 billion, with a net purchase price of $1.72 billion after tax attributes, the company said in a statement. The purchase price is being paid from cash balances, the statement said. The purchase price represents a 15.6x EBITDA multiple, the statement said.

The deal is expected to close by the end of the third quarter, subject to regulatory approval and other closing conditions.

Spectrum, with more than 2,200 employees, designs and makes complex medical parts and devices. The company expects to generate around $500 million in revenue this year, according to an investor presentation. The acquisition will combine DuPont’s materials science capabilities with Spectrum’s medical device manufacturing operations.

AEA acquired Spectrum Plastics in 2018 from Kohlberg & Co, which created the company in 2017 with the merger of Pexco and PPC Industries. Kohlberg acquired PPC in 2014.

Liquid cooling: KKR agreed to acquire CoolIT Systems, which provides liquid cooling for computing environments in the data center market, including enterprise computing, cloud service providers as well as desktop computing.

KKR is making the investment through its Global Impact Strategy, focused on opportunities that align financial performance and societal impact. As part of the deal, the company will expand its equity ownership program to all employees, which has become an important part of KKR’s investment strategy.

“Increasing data and computing needs are on a collision course with sustainability considerations – the data center industry is expected to consume 8 percent of the world’s energy by 2030,” Kyle Matter, managing director and head of KKR’s global impact team in North America, said in a statement.

Valuations: PE valuations is a topic that is top of mind for limited partners these days. GPs have not moved their performance marks very much as compared to the wild swings of the public markets over the past year. StepStone estimates in a recent report that PE will be down 6.9 percent for the full year 2022, significantly less than public markets.

“It’s an issue that people worry about: ‘How can this fund be up when everything else I own is down?’ You can almost hear behind the words, ‘Are you cooking the books? Are you making stuff up?’ The answer is no,” says Brian Murphy, managing member and managing director at Portfolio Advisors. Read more here on Buyouts.

That’s it for me! Have a great rest of the day. Hit me up with tips n’ gossip, feedback or book recs (I’m currently re-reading Bleak House), at cwitkowsky@buyoutsinsider.com or find me on LinkedIn.