Blackstone and the rise of special opportunities strategies, GTCR buys PPC from MSCP with more dealmaking to follow

GTCR buys PPC from MSCP.

Morning, everybody!

GTCR is ready to unlock more value at PPC Flexible Packaging, which under seller Morgan Stanley Capital Partners emerged as a differentiated, scale player through its focus on growthy end-markets.

PPC, of Buffalo Grove, Illinois, is known for flexographic printing and converting of flexible films, bags, pouches and prototype packaging. PPC’s offerings span cleanroom packaging for healthcare and medical applications, snack and organic brands, as well as specialty produce, nutraceutical and bakery end markets.

Fueled by an aggressive M&A playbook, PPC under MSCP saw its EBITDA grow to around $50 million of EBITDA today, up from the single-digits of EBITDA when it backed the company in 2017, a source familiar with the matter said.

PPC executed seven acquisitions under MSCP and GTCR sees a long runway ahead in the highly fragmented market.

“We’ll be aggressive buyers in those opportunities. This industry is highly fragmented with lots of smaller and mid-sized acquisitions to be done over time,” GTCR managing director Dave Donnini told PE Hub. “I’d love to think we can triple this in five years. A transformational deal or two will be the biggest variable.”

Read my full report on PE Hub.

Opps: Private equity firms are constantly changing their tactics in order to find new frontiers where others are not spending time. Over the last decade, that has led to the proliferation of firms putting capital to work across a new asset class.

Blackstone’s Tactical Opportunities strategy, hatched a decade ago by David Blitzer, is nimble, focused and all-weather. Back in 2011, as the world worked to make a comeback from a deep recession, Blitzer spotted some opportunities that were not being taken up by his firm – or, for that matter, by anyone else. This, Blitzer says, together with financial industry restructuring in the wake of the crisis, “left a supply gap.”

More than this, Tactical Opportunities helped inaugurate a new investment niche – broadly known as special opportunities – that seems to be catching on in private markets. Presently, a dozen or so PE firms offer these strategies, or ones that resemble them. Along with Blackstone, they include Apollo Global Management, Ares Management, Brookfield Asset Management, Sixth Street and TowerBrook Capital Partners.

While programs under this banner vary widely in emphasis, they share a few key characteristics. Among them is Tactical Opportunities’ concentration on assets, geographies, markets and sectors that are not covered by a firm’s flagship funds.

Other common features are the provision of tailored, non-control capital solutions to address unmet private and public business demand. Strategies also tend to invest in the middle of the capital structure, between equity and debt. Finally, and perhaps most importantly, they tend to be all-weather in nature, on the hunt for opportunities in both up- and down-cycles.

LPs are also finding the playbook a favorable one. “For LPs like us, they also fill a gap,” says Brian Gildea, head of investments at Hamilton Lane. “Investors want more choice and customization than ever before. Through these strategies, they get exposure to something new and a little bit different. The creation of a hybrid between equity and debt should also provide for diversification and uncorrelated returns.”

For more on this evolution, read Kirk Falconer’s full report on Buyouts.

That’s it for me! Have a great week ahead, and as always, hit me up at with your comments, tips or anything else!