KKR-backed audio book publisher reportedly heading to market; plus EQT on GotPhoto deal

Good morning, dealmakers. MK Flynn here with today’s Wire.

We’ve got a scoop on KKR prepping a portfolio company for sale, according to sources.

And we’ve got an interview with EQT about a deal the firm announced this morning.

Plus, we’ve predicted that PE bankruptcies would go up, given the nature of today’s economy, and a new report finds they have.

Heard any good books lately?
KKR is eyeing a sale of its portfolio company RBMedia, a publisher of audio books, for up to $2 billion, sources told Buyouts’ Chris Witkowsky.

The process is not live yet, and it’s not clear when the asset could hit the market. Advisers have not yet been signed up for the deal.

A spokesperson for KKR declined to comment.

The Landover, Maryland-based company was producing Ebitda in the range of $100 million to $125 million, one of the sources said. A $2 billion sale would represent the high end of what the company could trade for. “That’s high but it could get that,” the source said.
KKR acquired RBMedia in 2018 from Shamrock Capital, which invested in 2015. In 2020, KKR-backed OverDrive, a digital library platform, acquired the library assets of RBMedia, the company said.

Earlier this year, the company added-on Ukemi Audiobooks, which since 2015 produced previously unreleased fiction and nonfiction classics, and Dharma Audiobooks, which publishes Buddhist recordings, including biographies, histories and classic literature, the company said in a statement.

Other add-ons under KKR’s ownership include German audiobook publisher ABOD in 2022. In 2021, add-ons included European audiobook company Booka; McGraw-Hill Professionals audiobook business; and Author’s Republic, an audiobook self-publisher.

The global spoken audio market has grown steadily over the past few years, RBMedia said on its website. It expects growth from about $7.9 billion last year to $9.5 billion this year, though market turmoil from the bank crisis could impact that estimate.

A picture is worth 1,000 words
EQT is buying a majority of GotPhoto from its founders, angel investors and management team, PE Hub Europe editor Craig McGlashan reported earlier today.
Craig spoke with Dominik Stein, a partner in the EQT growth investment advisory team, and Benedikt Greifenhofer, the CEO of GotPhoto.

“This is a very interesting market,” said Stein. “There is huge digitization potential. There is huge potential penetration in a fragmented market. It’s not a huge company yet but it’s by far the market leader, and we can accelerate growth.”

Founded in 2012 and headquartered in Berlin, GotPhoto is a one-stop shop for photographers, offering services such as workflow and photo management, explained Greifenhofer.

GotPhoto has focused on the volume photography business, which has had lagged other parts of the photography market in moving to digital.

“The dynamics of digitization started in consumer, personal and wedding photography,” said Greifenhofer. Many photographers have looked down on the volume business as being “bread and butter,” he added.

Digitizing the volume business has also been a far harder task, he added. “Take a wedding – it’s one client, one session, one fee. Multiply that by 1,000 and you have volume photography.”

With EQT’s backing, GotPhoto is looking to expand.

The firm has a lot of organic growth to capture in its main markets of Germany, the UK and the US, said Greifenhofer. It would also like to grow in Asia and Europe, while inorganic growth would be focused on acquisitions that can enhance the company, rather than buying out competitors. Add-ons could involve photo editing and artificial intelligence.

Bankruptcy watch
Private equity portfolio companies in the US are on track in 2023 to see the highest annual number of bankruptcies since 2020, as rising interest rates and an uncertain economic outlook force tough decisions, reports S&P Global Market Intelligence.

There were 143 US companies that filed for bankruptcy protection in the first 75 days of the year, including 16 companies with private equity or venture capital backing, according to the research firm.

PE portfolio company bankruptcies since Jan. 1, 2022, are largely concentrated in the consumer discretionary and healthcare sectors, which Market Intelligence identified as the highest risk sectors at the end of 2022.

Dear reader
If you’ve got thoughts on private equity dealmaking – or scoops on upcoming deals – I’d love to hear from you.

You can reach me at mk.flynn@peimedia.com.

We’ll be back with more tomorrow.

Cheers,

MK