General Atlantic reinvests in Authentic Brands Group; Carlyle and Stellex close Titan deal

Good morning, dealmakers. MK Flynn here with today’s Wire.

There’s news this morning about a couple of significant transactions:

General Atlantic just announced a follow-on investment in Authentic Brands Group.

And Carlyle and Stellex have closed their deal for Titan.

But in general, deals are harder to close these days, and private equity firms are focusing on value creation more than ever. BDO is out with a survey that reflects the current sentiments.

We’ve got the details on those stories, below, plus a Pride Month interview with Inovia Capital’s Michael McGraw.

Bend it like Beckham
General Atlantic has made a $500 million follow-on investment in New York-based Authentic Brands Group, a global brand owner, marketing and entertainment platform, reports Iris Dorbian.

General Atlantic first invested in Authentic in 2017. The current deal brings the firm’s total invested capital in the company to nearly $2 billion.

“Over the past six years of our work together, Authentic has significantly accelerated its growth by capitalizing on meaningful M&A opportunities, expanding into key markets and building a deeply experienced management team,” said Andrew Crawford, managing director and global head of consumer at General Atlantic, in a statement.

Founded in 2010, Authentic owns a portfolio of more than 40 lifestyle, entertainment and media brands.

In 2022, the company formed a strategic partnership with David Beckham to co-own and manage his global brand; completed its largest acquisition to date with sports culture brand Reebok; and finalized the acquisition of British lifestyle brand Ted Baker, reinforcing the company’s presence in the UK, Europe and the Middle East. In recent months, Authentic has acquired the intellectual property of luxury lifestyle brand Vince and outdoor lifestyle brand Hunter, and signed a definitive agreement to purchase active lifestyle company Boardriders. The company also unveiled Authentic Studios, a production studio that comprises four labels, including Shaquille O’Neal’s Jersey Legends, David Beckham’s Studio 99, Sports Illustrated Studios and Authentic Productions.

Authentic’s other significant shareholders include BlackRock, CVC Capital Partners, Simon Property Group, HPS Investment Partners, Leonard Green & Partners and Brookfield.

Positive trajectory

Carlyle and Stellex Capital Management have completed the sale of Titan Acquisition Holdings, a bi-coastal specialist in ship repair services and marine and heavy complex fabrication, to an affiliate of Lone Star Funds.

The deal was announced in February, and the final close took place on June 15.
Titan is comprised of Vigor Industrial, an infrastructure, defense, and maritime services company based in Portland, Oregon; MHI Holdings, a ship repair and maintenance services company based in Norfolk, Virginia; and Continental Maritime of San Diego.
Titan’s customers include the US Navy, US Coast Guard, US Army and Boeing.

“We are proud of the many accomplishments of the Titan team over the course of our partnership as we transformed the business into a national leader in ship repair,” Derek Whang, managing director of Carlyle, said in a press release. “Titan is well-positioned to maintain its positive trajectory, and we wish the team continued success in its next phase of growth.”

“After almost a decade of investing in the ship repair and defense industries, we continue to see a great deal of opportunity for growth in this space and we plan to utilize our expertise in an effort to make future strategic investments for our portfolio,” said David Waxman, managing director of Stellex.

Value creation
Private equity firms are “prioritizing organic value creation amid challenging financing conditions and rising asset prices,” finds BDO’s 2023 Private Capital Survey, published this week.

“Doubling down on value creation over the next several months will be critical for funds and portfolio companies in resilient growth mode,” said Jim Clayton, management consulting principal, private equity national co-leader, and private equity national advisory leader. “The margins for success are slim. Decisions made today could mean the difference between effectively executing a transaction that generates returns for limited partners a year from now or pushes a portfolio company closer to default.”

Trends the survey uncovered include:
• Talent management is the top value creation lever both fund managers and portfolio company CFOs plan to deploy in the next 12 months
• Nearly half of CFOs and fund managers say they are understaffed, especially in critical areas like leadership and finance
• Three in five CFOs surveyed started working in their current roles less than 10 years ago, during or after 2013—five years after the financial crisis

The survey measured the sentiments of more than 400 US private equity fund managers and operating partners, 200 portfolio company CFOs, and 50 portfolio company board members.

Pride Month
The second installment in our series elevating the voices of members of the LGBTQ+ community features Michael McGraw, a principal at Montreal-headquartered Inovia Capital. McGraw is based in the firm’s London office and was interviewed by PE Hub Europe’s Nina Lindholm.

It’s easy to think of coming out as one singular moment. In reality, many members of the LGBTQ+ community do so several times during their lifetime. McGraw decided to initially stay in the closet at his first job at a large PE investor. “I wanted to establish myself as a great investor,” he said. “Not that I had any sign that people would not be receptive to me coming out, but I was just not willing to take the risk.”

McGraw was eventually “forced” to come out, as he received a bouquet of flowers for his birthday while at work. “I opened the card in front of my two peers, who saw it was sent by a guy I was seeing at the time,” he explained.

While generally not the preferred way to come out, McGraw is retrospectively able to be thankful about the turn of events. “My peers responded well, and asked why I hadn’t told them sooner,” he said. “But when you’re so far down that path, it’s hard to do.”

Since his first job, a mix of internal and external factors have changed, according to McGraw, and coming out became almost a non-issue when he changed jobs. “I probably dropped the boyfriend word within the first couple of weeks.”

At Inovia, many of the firm’s initiatives are about internal policies and training. McGraw stressed that it is important to consider whether policies are LGBTQ+ friendly. “From a healthcare or a parental leave perspective – some firms have fertility benefits,” he said. “What about surrogate or adoption process, is that covered as well?”

An accepting environment isn’t necessarily enough. Providing training – to equip colleagues to use the correct vocabulary, for example – is a part of it. But this must be done in a safe learning environment, McGraw said. “If someone uses the wrong pronoun by accident, but they have good intent, that’s the most important thing.”

That’s all for today.

Obey Martin Manayiti will be back tomorrow with Friday’s Wire, and I’ll see you on Monday.

All the best,

MK