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.
GTCR on Friday announced its acquisition of PPC, a Buffalo Grove, Illinois-based maker of 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. Revenue during that time grew to about $300 million from $25 million, this person said.
PPC executed seven acquisitions under MSCP and GTCR sees an long runway ahead in the highly fragmented market. With M&A opportunities of all sizes on the table, GTCR intends to commit significant incremental equity to fund future transactions and expansion opportunities.
“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.”
GTCR will double down on the more attractive end-markets that PPC already serves, including medical applications as well as areas of the consumer market such as pet food products, Donnini said. “The key is to be selective and buy good businesses in good end markets.”
PPC under MSCP looked to fill a gap in packaging through its concentration on short- and medium-run packaging. The company prints smaller or medium-sized quantities of packaging solutions, which requires strong operational capabilities that can be modified to produce several variations.
Driving the need for short- and medium-run packaging, for example, are the favorable growth trends of upstarts of better-for-you consumer brands the likes of Hippeas chickpeas or Lenny and Larry’s cookies.
PPC also has the capabilities needed to produce more complex packaging solutions such as standup pouches for nutraceuticals or the ability to insert zippers on a bag.
For GTCR, the proven abilities and track record of the PPC management team – led by seasoned industry CEO Kevin Keneally – aligns with its Leaders Strategy, which involves partnering with exceptional leaders to build market-leading companies.
MSCP partnered with Keneally in 2016 after the executive’s former company Optimum Plastics was acquired by Charter NEX Films, then owned by Pamplona Capital Management. In 2017, Leonard Green & Partners bought Charter Nex at a reported valuation of $1.5 billion.
PPC represented both the first packaging investment and exit for MSCP, which also owns healthcare packaging platform Comar and AWT Labels & Packaging, a provider of labels and flexible packaging solutions.
William Blair provided financial advice to PPC, with co-advisory support from Raymond James.
Another larger flexible packaging and material science consolidator of scale to keep tabs on is Pritzker Private Capital’s ProAmpac. Pritzker has owned ProAmpac since 2016 and in January of this year injected an additional investment in the company.