GTCR takes financial services position with R&T Deposit Solutions investment; Marketing agency roundup

Hello Hubsters!

It’s Rafael Canton stepping in for MK Flynn on this Thursday edition of the Wire.

This morning we start with a couple of deals, with GTCR making a play in financial services and Bain Capital investing in the industrial sector.

We then move on to a roundup of recent marketing agency deals.

Next, we’ll dive into an outlook by Irien Joseph with THL’s Shahab Vagefi about how deal activity is expected to pick up in the rest of the year and heading into 2024.

Finally, we have a look into Energy Capital Partners being acquired by London-listed private equity investor Bridgepoint Group.

Financial services share
GTCR has made an investment in R&T Deposit Solutions, a provider of tech-enabled liquidity management, deposit funding, and securities-based lending programs.

After the deal, GTCR will own 50 percent of New York City-based R&T with the remaining 50 percent retained by existing shareholders, which include Estancia Capital Partners and R&T’s founding team and employees.

“As a result of this new investment, R&T will expand on its leading range of client-focused solutions for cash management, liquidity, and securities-based lending,” said Mike Hollander, a managing director at GTCR. “We believe that R&T is well-positioned to accelerate its already strong growth trajectory and we have tremendous conviction in the caliber and capabilities of R&T’s leadership team.”

Industrial flow control
Bain Capital Private Equity has agreed to acquire Harrington Process Solutions, a specialty distributor of industrial flow control process products.

Chino, California-based Harrington will continue to operate as a standalone company and be led by its current management team. The deal is expected to close in the fourth quarter of 2023.

“Harrington has been gaining market share for many years, driven by differentiated technical expertise, product availability, and execution,” said Joe Robbins, a partner at Bain Capital, in a statement.

Marketing still going strong
Throughout the past few months, we’ve seen an increase in deals involving marketing and advertising agencies. I rounded up six that have been announced in the US and Europe. Here are highlights of a couple that stood out.

In August, New York-based private equity firm EagleTree Capital announced an exit from marketing agency Sparks, selling the agency to live events company Freeman. Headquartered in Philadelphia, Sparks doubled in size from 2019, according to a statement announcing the news. EagleTree initially invested in Sparks in 2020.

“This exit represents a validation of our expertise and conviction in the live events sector and in the fact that Sparks is a best-in-class operator,” Michael Struble, senior partner of EagleTree, said in a statement.

In March, Boston-based Advent International exited marketing production company Tag, selling it to advertising and marketing agency Dentsu. Advent invested more than $100 million in Tag over the past five years.

“We have worked in partnership with Tag’s leadership team to build a world leader in marketing activation,” said Chris Benson, director at Advent. “Under Advent’s ownership, the company has grown significantly and continues to achieve double digit organic revenue growth.”

For more on this trend, check out Obey Martin Manayiti’s coverage of an increase in digital marketing deals from earlier this year.

Healthcare dealmaking on the rebound
Healthcare dealflow was slow for much of 2022 heading into 2023 but the expectation is that there should be an increase in the sector for the rest of the year. Shahab Vagefi, MD in the healthcare division at Thomas H Lee Partners, spoke to PE Hub’s Irien Joseph about potential deals in healthcare and more.

There are a few subsectors, such as information technology, to look out for, says Vagefi.

What are the opportunities for investing in healthcare?
HCIT (healthcare information technology) remains an important focus area and pharma services. From an HCIT perspective, we see a long-term, durable trend towards the enablement of better care at a lower cost and with a better experience for patients and the providers. A lot of that is going to be driven by digital health and health tech solutions.

Read the full interview to learn more about how recession worries are still a concern and what makes for a good exit opportunity.

This week has been an opportunity for us to look at the healthcare sector. In case you missed it, I spoke to Eric Liu from EQT earlier this week about a thaw in dealmaking in the healthcare sector for H2.

Absorbing Energy
In deals announced in the news, we have London-listed private equity investor Bridgepoint Group acquiring Energy Capital Partners.

The deal set an enterprise value of $1.05 billion for ECP.

ECP will continue to operate under its existing brand. Senior partner and founder Doug Kimmelman will stay in charge.

“There is a lot of solicitation of talent in the energy transition space because there’s a limited amount of talent, so to attract and retain the best was top of mind for considering how to keep our firm strong and growing over the next several decades,” Kimmelman said. “Therefore, broadening the ownership throughout our ranks was attractive. Now, 30 percent of our equity will be distributed to our broader team and having the public equity security is going to make a material difference.”

Note: Bridgepoint is the owner of PEI Group, the publisher of PE Hub.

That’s it from me today. MK Flynn will be taking care of the Wire to close out the week tomorrow.

If you have any thoughts, questions, or just want to chat, please email me at rafael.c@pei.group.

Cheers,

Rafael