H.I.G. agrees to acquire RBmedia from KKR; unrealized value in PE portfolios at all-time high

H.I.G. is buying audiobook publisher RBmedia.

Morning Hubsters!

This is Chris, on for Wire Wednesday.

Back in March, we reported that KKR was prepping its company RBmedia, a publisher of audio books, for a sale, seeking up to $2 billion.

That process has wrapped up, according to the firm, which announced this morning KKR sold the company to H.I.G. Capital. RBmedia worked with Goldman Sachs and LionTree Advisors on the sale.

The sale is expected to close in the fourth quarter. As has become routine, RBmedia employees will receive cash payouts based on their tenure with the company. Long-term employees will earn up to 2x their annual salaries.

“The audiobook market is set for significant growth and investment in the coming years,” said Aaron Tolson, managing director at H.I.G.

KKR invested in RBmedia in 2018 and under the firm’s ownership, the company doubled the size of its catalog to 66,000 audiobooks from 31,000. The company also expanded its distribution channels and experienced five years of double-digit revenue growth, invested in diverse content and expanded into international markets.

An exit is something that should be celebrated in today’s market, where exit activity has dried up and assets are sitting in PE portfolios for longer than ever. This has caused distribution activity to slow, which means less capital flowing back into the coffers of limited partners, many of which are slowing their pace of committing to private equity, which is making fundraising challenging.

As I’ve often heard this year, an IR executive I spoke to recently said, in their career spanning more than two decades, they’ve never seen a tougher fundraising market.
A resurgence of exit activity would go a long way to helping ease up the fundraising blockade. Not to mention, improving public markets will alleviate overexposure issues experienced by many LP institutions.

According to Bain & Co., buyout-backed exits fell to $131 billion over the first half, a 65 percent decline from the same period a year ago, according to Bain & Co’s report. Exit value is tracking down 54 percent and the count is off 30 percent compared with 2022, the report said.

The unrealized value sitting in buyout funds has set an all-time record, at around $2.8 trillion, Bain & Co found. More than half of that has been held for more than four years, and nearly one-quarter longer than six years. Read more here on Buyouts.

Perhaps no sort of PE firm faces a tougher challenge than a firm raising its debut fund. A few of them are navigating their way to final close.

Bansk Group, formed in 2019 for investments in branded consumer packaged goods companies, closed its debut fund on $800 million. The firm, which launched fundraising in 2021, has deployed more than half the fund across four investments.

“The companies we’re investing in are consumer staples, non-discretionary. These companies have not been materially impacted by what’s going on in the economy and given the fact that they’re consumer staples, are less affected by the market environment,” according to Brian O’Connor, senior partner and chief investment officer at Bansk Group.

Read more here on Buyouts.

That’s it for me! Have a great rest of your Wednesday. Hit me up with feedback, tips n’ gossip or book recommendations at cwitkowsky@pei.group or find me on LinkedIn.