Inside Apax Partners’ sale of Kepro to Carlyle; and behind Bluejay’s backing of warehouse specialist BWT

Bluejay acquires warehouse firm BWT.

Good morning, dealmakers! It’s Aaron here on the Wire today, featuring an exit by Apax and an acquisition by relative newcomer Bluejay Capital.

I am not sure about you, but I honestly can’t believe it is December already! What do the final few weeks of the year look like for you? Are you trying to get deals done, or are you sitting back, taking some time off after a busy couple of years? I would love to hear from you, as well as your thoughts on what’s ahead for 2023. Feel free to email me at aaron.w@peimedia.com and let me know!

Healthcare heartbeat. You might recall a few weeks ago, I mentioned Carlyle’s acquisition of Kepro from Apax Partners as a deal that I was looking into. Well, the wait is over. I had a chance to catch up with Apax partner Andrew Cavanna about the recent exit. I was especially excited to write an exit story, as exits have slowed down.

Headquartered in Nashville, Kepro was originally known as Keystone State Peer Review Organization, created decades ago as a nonprofit to promote quality healthcare services for beneficiaries of Medicare and other government programs. Apax held the asset for roughly five years, after investing in 2017. Today, Kepro provides largely clinical services that enable government-funded health plans, principally Medicaid and Medicare, to deliver benefits and meet professionally recognized standards of care.

With the acquisition by Carlyle, Kepro has been merged with existing Carlyle portfolio company CNSI. Based in McLean, Virginia, CNSI delivers a broad range of health information technology enterprise solutions and products to a diverse base of state and federal agencies in the United States that help clients enhance business performance, reduce costs and improve the health of individuals and communities.

“We felt like we’d accomplished many of the things that we set out to do,” said Cavanna. “As a result of building a higher quality company, we received inbound interest. Among the parties was Carlyle and CNSI, the company they were backing. We decided to engage with them directly.”

Cavanna gave Carlyle “a lot of credit” for sticking to its guns during deal negotiations. (Carlyle declined to comment on the transaction.) The folks at Carlyle “said up front: ‘We’re not going to over-lever the transaction and will fund enough equity to get this done,’ and consequently, this deal did not hinge on really robust credit markets,” Cavanna explained. “This transaction was not particularly challenging in terms of agreeing on a price. Among other things, we and they had invested a lot of time upfront. Moreover, Carlyle had acquired CNSI at the end of last year, so they are only 10 or 11 months into their hold – making them very current as to the multiples in the sector. So, when they approached us, they had a very good understanding of the market.”

When Apax took over the asset, Cavanna knew tailwinds would help the company grow.
“Many government entities are looking to outsource some of the required services because they’re having challenges staffing, managing and delivering,” said Cavanna. “As such, it is a strong option to partner with companies like Kepro to help fulfill some of the components of Medicaid benefit.”

You can read the whole story here.

Warehousing. PE Hub reporter Obey Martin Manayiti recently wrote a piece detailing Bluejay Capital’s latest investment in Best Warehousing and Transportation. Obey spoke with founding partner Josh Putterman about the BWT acquisition and the ongoing need for logistics businesses. Putterman said he is bullish on warehousing and that he aims to triple BWT’s revenues over the next five years or so.

Bluejay was founded in 2020, and all its partners had prior experience as owners or operators of logistics and transportation businesses. The investment firm has offices in Jacksonville Beach, Florida, and Denver.

Demand for warehouses has soared over the last few years, a trend accelerated by the growth of e-commerce during the pandemic. Even as lockdowns have ended and some supply chain issues have been resolved, Putterman expects demand to continue. As a sign of ongoing business for BWT, he cited the company’s multi-year contracts with customers, wrote Obey.

Bluejay was drawn to back BWT for several reasons. Putterman was impressed by BWT’s growth, its ability to court big-name customers, its breadth of services and its ability to operate from 15 states.

Putterman described several areas of potential growth for BWT: adding new customers; extending warehousing services; growing the transportation arm of the business; especially short-haul shuttling; developing dedicated transportation for specific clients; and expanding the brokerage side of the business. “Those are all things that our team has great experiences with,” he said.

Even as fears of a recession mount due to the tightening macroeconomic environment, Putterman is confident about BWT’s prospects. “We have more opportunities coming our way,” he said, in comparison to risks that might erode business in the foreseeable future.

You can read the whole story here.

Fresh off the presses. Before I sign off for the day, I just wanted to share that the most recent and last Buyouts magazine of 2022 is now available. Just off the presses a few hours ago, you can download the digital copy below.

The issue features stories from Buyouts, PE Hub, Private Equity International and other brands. This month’s cover story, written by Kirk Falconer, Iris Dorbian, Chris Witkowsky and Gregg Gethard, features six prominent members of the PE community: Nate Taylor, KKR; John Maldonado, Advent International; Scott Voss, HarbourVest; Anjan Mukherjee, BayPine; David Quigley, McKinsey & Company; and Jennifer Choi, ILPA. These luminaries share their takes on some hard-hitting questions.

Be sure to check it out!

Click here to download December’s 2022 edition of Buyouts.

That’s a wrap for today! I will be back with you tomorrow. Until then, happy dealmaking!

Cheers,

Aaron