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GTCR co-CEOs see opportunities in uncertain times; KKR acquires majority stake of bottler Refresco

KKR to acquire Refreso and Goldman Sachs forms new healthcare advisory council.

Good morning, Hubsters. MK Flynn here. After a relaxing long weekend, we’re back with the Wire. Talk about two(s) for Tuesday. Here’s hoping 2/22/22 brings good luck!

This morning, my Q&A series with high-profile private equity pros continues, with insights from Dean Mihas and Collin Roche, co-CEOs and managing directors at GTCR.

“Based on the way 2021 ended and the way 2022 has started, it’s clear that we have shifted to a more uncertain environment, and it may mean the topping of valuations after a very long cycle,” Roche said. “If the landscape becomes more challenging, we are confident that our portfolio is positioned to not only do well, but also take advantage of any uncertainty. Having experienced many market cycles across our tenures here and more generally across the long history of our firm, we are big believers in accelerating in these environments when others may pull back. We think that times of uncertainty usually create the best set of investment opportunities.”

When asked about managing GTCR’s portfolio through inflation, rising interest rates, supply chain disruptions and labor shortages, Mihas said: “We are focused on investing to be on the right side of change, whether that be in technology and tech-enabled services or other areas of major change like medical technologies and life sciences. Those areas tend to be more resilient to the current concerns around labor disruptions and inflationary rates on inputs. In general, we are spending more time with our teams on what may happen, and less on what has already happened. We are focused on the future and being prepared for any set of developments. Of course, we are always concerned about downside potential, but we are equally focused on where we can invest into a market like this given the uncertainty.” Read the interview for more.

Thirst quenching. KKR announced this morning that it has agreed to acquire a majority stake in Refresco, one of the largest independent beverage contract manufacturers in the world. Refresco’s existing investors, PAI Partners and British Columbia Investment Management are maintaining a significant minority position.

“Refresco has established itself as an industry leader supporting the global beverage industry with a blue-chip global customer base, an experienced and highly regarded management team, and an impressive network of assets that provides compelling value to customers,” KKR partner James Cunningham said. “The company also has a strong commitment to sustainability, which is an important differentiator for its customers. We look forward to leveraging our operational expertise from across the KKR platform to support the company’s continued growth and further advance the sustainability of its value chain.” KKR is making the investment primarily through its Global Infrastructure strategy, which was established in 2008. The firm currently oversees approximately $40 billion in infrastructure assets and has made over 60 infrastructure investments across a range of sub-sectors and geographies.

Growth equity. Blackstone is not wasting any time ramping up its growth platform,” writes Chris. “The firm, which is just starting to raise what could become the largest-ever private equity fund, also is targeting $7 billion to $8 billion for its second growth fund, according to sources and a document from the Minnesota State Board of Investment.” Chris points out that the growth group earlier this month invested more than $100 million in Cloudinary, a media experience cloud company, valuing the company at $2 billion. “Growth equity, while long a vital part of the private equity universe, has become a popular strategy especially in connection with the rise of technology investing. Last year, growth equity hit an all-time fundraising high, with 121 North American growth funds raising more than $108 billion.” Read the story to learn more details about Blackstone growth fund strategy – and to learn which other big shops have expanded into growth investing.

Healthcare advisors. Former Senate Majority Leader Bill Frist; Molly Joseph, former CEO of UnitedHealthcare Global; and Rolf Classon, former chairman of the executive committee of Bayer HealthCare AG and others have joined a new healthcare advisory council at Goldman Sachs Asset Management. The council aims to help identify investment opportunities and drive strategic, long-term value creation for portfolio companies. In 2021, the Goldman group led 39 healthcare investments, representing nearly $10 billion of equity and debt capital invested in the sector. Portfolio companies include: 4G Clinical, Amedes, Aragen Life Sciences, AvaSure, Datavant, eVisit, H1, MDVIP, Mirion Technologies, New Frontier Health and Parexel.

That’s what’s going on in PE for now.

This afternoon, I’m joining my colleagues from PEI Media in a day of service for Black History Month. We’ll be packing bags of donated clothes at the Black Feminist Project.

Chris writes the Wire on Wednesdays, so I’ll see you on Thursday.

Cheers, MK