Getty Images, struggling under $2.3 bln debt load, adds Koch as new investor

Koch Equity Development is investing $500 million in Getty Images for a non-controlling stake in the stock-photo company.

It’s unclear how big Koch’s holding is in Getty, which is laboring under a heavy debt load. The Getty family is retaining control over the company, a statement said.

Koch Equity, the PE arm of Koch Industries, will have no input into Getty Images’ content or editorial coverage. Koch’s investment is preferred equity and not debt, Getty spokeswoman Anne Flanagan said.

The deal comes just weeks after the Getty family said in early September it was buying Carlyle Group’s majority stake in the company. The family paid $250 million for Carlyle’s 51 percent holding, the Financial Times reported. That deal has closed, Flanagan said.

Getty Images said that month it was refinancing its balance sheet, which may involve marketing a combination of loans, senior notes and preferred.

The company has $2.3 billion in debt, press reports say. More than 80 percent of Getty’s debt comes due next year, Breaking Views reported in September.

The refinancing has not closed and “is not Koch,” Flanagan said. She declined comment on Getty’s leverage.

Founded in 1995, the Seattle stock-photo agency supplies images for business and consumers. It also provides video and music.

The company has had to adapt to a shift in media to online from print, Buyouts reported. While demand for images has grown, the prices for online use are lower than for print, the story said.

Getty Images produced about $836.8 million of revenue in 2017, Moody’s reported.

Koch is the latest PE investor for Getty. Hellman & Friedman acquired Getty in 2008 in a deal valued at $2 billion.

During Hellman’s tenure, Getty paid out roughly $900 million in dividends, Buyouts reported. Hellman sold its stake in Getty to Carlyle for $3.3 billion in 2012. Carlyle did not take any dividends during its ownership, a source said

With offices in Wichita and London, Koch Equity has been active. The firm will partner with parties, like the Getty family, taking up to 50 percent ownership for joint control of a company. Koch’s minimum investment in partnerships is $250 million.

In 2017, Koch invested more than $2 billion in Infor, a provider of business applications. Infor’s existing shareholders, Golden Gate Capital, Summit Partners along with company management, retained control.

Koch Equity Development also provided $650 million in preferred equity to back Meredith’s buy of Time Inc in January for $1.84 billion.

Koch Equity will also make structured investments, providing a minimum of $100 million. In 2016, Koch Equity supplied $800 million via preferred equity, minority common equity and a bridge facility to help Vista Equity Partners take Solera Holdings private in a deal valued at $6.5 billion.

Koch could not be reached for comment.

Action Item: For more on Koch Equity: