Bridge to buy Newbury; LMP sees ‘fruitful ground’ in retirement services

Bridge is acquiring secondaries firm Newbury for $320 million.

Happy Valentine’s Day, Hubsters.

MK Flynn here with today’s Wire, hoping your day is filled with love.
So far, my day has been filled with deal announcements, including one involving secondaries stakes, on this busy Tuesday morning.

We’re also featuring an interview with Lovell Minnick Partners about a recent investment in retirement services.

Let’s get right to today’s deals.

Bridge Investment Group Holdings announced this morning that it has entered into a definitive agreement to acquire substantially all of the business of Newbury Partners LLC, an investment manager that specializes in acquiring limited partnership interests in private equity funds through secondary transactions. The all-cash transaction is valued at roughly $320 million.

Founded in 2006, Newbury focuses on LP interests in established buyout, growth equity and venture capital funds. The firm has raised over $6.2 billion of committed investor capital across five dedicated funds and has invested in over 500 underlying interests on behalf of more than 250 LPs worldwide.

“The acquisition of Newbury is a natural next step in thoughtfully expanding Bridge’s investment platform and capitalizing on a value-enhancing growth opportunity,” said Robert Morse, executive chairman of Bridge. “As investors’ allocations to alternative investments grow, we believe growth in the secondaries market will also accelerate.”

CORE Industrial Partners, a manufacturing, industrial technology, and industrial services-focused private equity firm, announced today the acquisition of GEM Manufacturing, a provider of precision deep drawn metal components and mechanical assemblies. GEM represents the fifth platform investment in CORE Industrial Partners Fund II, a $465 million fund closed in February 2021.

“Our acquisition of GEM serves as the latest example of our focus on partnering with founder, family and entrepreneur-owned businesses in proactively identified thematic verticals with attractive investment dynamics,” said John May, managing partner of CORE. “We believe we can leverage our deep precision manufacturing experience to help expedite the Company’s next stage of growth.”

Drilling Tools International, an oilfield services company that has been a majority owned by Hicks Equity Partners for almost ten years, announced its plans to go public through a business combination with ROC Energy Acquisition Corp, a publicly traded special purpose acquisition company. The combined company is expected to be listed under the new ticker symbol “DTI.”

Hicks and other existing shareholders will reinvest over 95 percent of their equity holdings into the combined company to maximize cash on balance sheet.

Pharos Capital Group, a middle-market private equity firm based in Dallas and Nashville, announced today it has sold its majority stake in portfolio company MOTION PT Group to Confluent Health, for undisclosed terms. MOTION is a physical therapy, occupational therapy and speech therapy company with 59 clinic locations across Connecticut, Maryland, Massachusetts, and New York.

Under Pharos’ ownership, MOTION completed more than 25 acquisitions, expanded beyond its Brooklyn and Manhattan roots to new geographies, and developed hospital and health system relationships aimed at expanding access to care, improving patient outcomes, and lowering the overall cost of healthcare.

Time to retire? And now for a PE Hub deep dive. As the overall US population ages, it’s clear demand for retirement services of all kinds will grow. The desire of many American employees to secure retirement funds, coupled with regulatory trends, attracted Lovell Minnick Partners – a Radnor, Pennsylvania, PE firm – to take a majority investment in Definiti, a retirement services company based in The Woodlands, Texas, earlier this month.

PE Hub’s Obey Martin Manayiti caught up with Jason Barg, LMP partner, who detailed opportunities that the firm identified with Definiti. He described the company as a “trusted partner” for its clients, something that is key in establishing success in the retirement services space.

Definiti supports more than 8,000 workplace organizations and 10,000 retirement plans across the US, the company said. It’s a third-party administrator (TPA) that provides organizations with retirement plan administration, record keeping and compliance services, as well as actuarial consulting and pension outsourcing.

What interested LMP to make the investment is that Definiti provides complex services that are not easily replicated, Barg said. “Between the tailwinds of the market, plus the tailwinds for this specific company as one of the largest national TPA providers out there, we think that creates a really compelling investment opportunity for us.”

Among opportunities that LMP identified with this investment is the regulatory landscape for retirement savings that has a strong bipartisan consensus, Barg said.

The Secure 2.0 Act of 2022, signed by President Joe Biden end of last year, is one of the regulatory tools that encourages employees to save for retirement, facilitate access to retirement savings, and lower employers’ cost of offering and funding retirement savings plans, among other provisions.

The retirement services space is fragmented too. There are a couple of larger players on one hand, and then numerous smaller players on the other, a situation that Barg described as advantageous to their investment and the goal for consolidation. “It’s fruitful ground for acquisition strategies,” he said.

Organic growth, such as the ability to invest in the best technologies and investing in its own capabilities, can help Definiti “become a really attractive home for those smaller firms that are looking to partner with somebody larger,” Barg said.

Staying in the market. Over at Buyouts, Kirk Falconer had a scoop this morning, when he reported that Investment Management Corp of Ontario expanded private equity investing in 2022, as many of its LP peers grappled with cash constraints.

IMCO disbursed more than C$2.5 billion ($1.9 billion) to fund and direct investments last year, up 9 percent from 2021, said Craig Ferguson, managing director, private equity, in an exclusive interview.

This growth contrasts sharply with the experience of other North American institutions, many of which ran out of money because of overallocation to the asset class, Kirk wrote. LPs were also cash-poor because of weaker exit markets that dried-up distribution flows.

“We were fortunate as we had liquidity and no cash constraints,” Ferguson said. “We stayed in the market when others were pruning and kept deployments stable even though others were pulling back.”

We’ll wrap things up with some people news. Ara Partners, a private equity firm that specializes in industrial decarbonization investments, today announced that Peter Saldarriaga has joined the firm as a managing director. Saldarriaga will be based in Ara’s Boston office. He has over fifteen years of experience in private equity and consulting. He spent over twelve years at Bain Capital, focused on buyouts and growth investments in the industrial, business services, and technology sectors. Saldarriaga also was the co-founder, CEO, and CFO of Belong Acquisition Corp, a $150 million SPAC focused on high-growth tech-enabled businesses.

As I said, it’s been a busy morning!

As usual, Buyouts’ Chris Witkowsky will write Wednesday’s Wire, and I’ll be back on Thursday.