Private equity firms have been increasingly looking downstream to invest in late-stage growth companies. I wrote a big piece about this trend just this month and today’s newsletter talks about a deal within the growth space itself.
GPI Capital led a $175 million Series G round in Hopper, a mobile-only travel booking application, with an aim to scale its customer service capabilities while expanding into other products and markets through acquisitions.
The deal rationale for the firm was simple: The travel industry is witnessing a rebound and the company’s triple-digit growth in a challenging pandemic market was impressive, according to Khai Ha, managing partner at GPI Capital, now also a board member at Hopper.
Canada-based Hopper, much like other travel companies, had to reduce workforce and scale back its operations due to the pandemic. A large part of the round will be invested in automation tools, “so they are highly responsive to customer requests,” Ha said. The company will be hiring 500 employees, out of which 300 will be in customer services.
Hopper, at this time, has 39 open positions listed under customer service in Europe, Philippines, US and Canada.
In just March this year, the company raised $170 million in Series F funding led by Capital One Financial. According to sources, this round valued the company at $3.5 billion and saw participation from investors like Glade Brook Capital, WestCap, Goldman Sachs Growth and Accomplice.
More broadly speaking, while growth equity investments have been popular for some time, a lot of multi-strategy private equity firms have entered the space in the last five years, according to Kelly DePonte, managing director at placement firm Probitas Partners.
Private equity superstars such as Blackstone and KKR have recently launched dedicated growth funds that have been putting millions to work.
For them, growth is just another ancillary strategy, like secondaries, that managers are adding on so that they can offer LPs the full range of investment opportunity.
Protective manufacturing platform: Gryphon Investor-backed Mechanix Wear, a designer and manufacturer of work gloves, announced today the acquisition of Chicago Protective Apparel, a 108-year-old, family-owned manufacturer of personal protective equipment company. The company manufactures flash protective clothing and PPE to keep workers safe from hazards.
Gryphon made an investment in Valencia, California-based Mechanix Wear in August of last year. Mechanix specializes in automotive, construction, industrial, and tactical hand protection. At the time of investment, Mechanix Wear’s CEO and owner Michael Hale retained an ownership stake in the company.
In the case of CPA, the company’s previous owners, Scott and Myrna Sherman, are retiring after 30 years. Vice President John Merikoski stays on as director of production, along with other members of the management team.
Gryphon targets making equity investments of $50 million to $300 million in portfolio companies with enterprise values ranging from approximately $100 million to $600 million.
Tell me what’s happening on ground zero? At a summer BBQ event on Sunday, I met a PE firm recruiter. The source tells me that most firms are aggressively hunting for diverse talent – especially women. While this isn’t new (something I’ve heard from another recruiter as well), I’m wondering about other efforts by PE firms to incorporate diversity in their firms.
That’s it for today! Do you want to talk about deals, share news around a new hire or just say hello? Hit me up at email@example.com.