KKR goes to Peru; PE firms invest in accounting; Stellex discusses Titan exit

Good morning dealmakers, thank goodness it’s Friday!

It’s Obey Martin Manayiti here with the Wire.

Today I am capping off the week with a look at six accounting services deals here in the US and in Europe that caught the attention of my colleague Nina Lindholm.

I’m also featuring my interview with Stellex Capital Management managing director David Waxman who said his firm’s Titan Acquisition Holdings joint investment with Carlyle was spurred partly by the US Navy’s need to modernize and expand its fleet.

But first let’s look at this morning’s news, starting with an interesting deal from KKR.

More connectivity
KKR has entered into an agreement with telecommunication service providers Telefónica Hispanoamérica and Entel. The New York headquartered PE firm will acquire a majority interest in PangeaCo, which will subsequently acquire the existing fiber optic networks of the two companies.

The newly formed network will be open access, allowing usage to all internet service providers for the first time.

In Perú, approximately 88 percent of households have mobile or fixed internet service, but less than 35 percent have access to high-speed fiber optic networks, according to the deal announcement.

KKR plans to make approximately $200 million of additional investment to more than double the ultra-fast fiber network from more than 2 million homes passed today to reach 5.2 million homes passed across 86 provinces by the end of 2026.

Telefónica Hispanoamérica has operations in countries such as Mexico, Colombia, Venezuela, Perú, Ecuador, Uruguay, Chile and Argentina, while Entel operates in Chile and Perú.

Music catalogue
HarbourView Equity Partners has agreed to acquire select recorded music and publishing assets of recording artist Wiz Khalifa.

Based in Newark, New Jersey, HarbourView invests in entertainment and media.

“Wiz Khalifa has already made a profound impact on culture as a musician, executive, media visionary and creative force,” said Sherrese Clarke Soares, founder and CEO of HarbourView, in a statement. “We celebrate his talent and creativity and are thrilled to welcome him and Taylor Gang to the HarbourView family today.”

We profiled Clarke Soares back in 2022.

The job on the shipyard
The US Navy’s need to modernize and expand has fueled the growth of Titan Acquisition Holdings, a bi-coastal ship repair services provider, David Waxman, a managing director at Stellex Capital Management, told me after his firm recently exited the company.

Stellex and The Carlyle Group bought Titan in 2019. In June, the two PE firms sold it to Lone Star Funds for an undisclosed amount.

Based in Portland, Oregon, Titan offers ship repair services as well as marine and heavy complex fabrication to the US Navy, US Coast Guard, Military Sealift Command, US Army, Boeing, cruise lines, fishing fleets, barges, ferry services for local and state governments, and other key commercial and US government customers.

“There is a significant need for repair services that can only be met by a very small number of shipyards that have the combined facilities, skills and workforce to meet the needs of the Navy,” Waxman said.

The investors identified the opportunity to create a “bi-costal leader” in ship repair by combining MHI on the East Coast and Vigor Industrial on the West Coast. “The combined company operated the largest number of floating dry docks on the West Coast, which were critical to support the Navy’s expansion plans and shift to the Pacific.”

Several strategies were helpful to make this investment successful, Waxman said. The company acquired Continental Maritime of San Diego (CMSD) in 2020 to establish a strategic footprint in San Diego, the largest homeport for Navy ships on the West Coast.

Balancing the books
The first half of the year saw fresh interest from private equity firms in accounting and tax services, wrote my PE Hub Europe colleague Nina Lindholm. Some firms are interested in the consolidation opportunities, some see potential in digitalizing the industry further, and all are feeling increased compliance and regulation demands.

In May, Unity Partners, a Dallas-based PE firm, announced an investment in NDH, a Chicago-based provider of tax and accounting services.

NDH provides tax advisory, tax consulting, tax preparation, outsourced back-office accounting, fractional CFO and start-up business services.

Earlier, New York-based Orangewood Partners announced an investment in Fairfield, New Jersey-based DLA, an internal audit and accounting advisory firm.

“Over the past two decades, DLA has built a reputation as trusted advisers to leading corporations and developing practice areas that are tailor-made for the current environment, which is seeing an increasing focus on regulation, compliance, and internal controls,” said Eric Engler, a managing director of Orangewood in a statement. “To that end, we believe DLA is exceptionally well positioned to capitalize on the significant opportunities as clients recognize the value in outsourcing these essential business services.”

That’s it for me today.

PE Hub editor-in-chief MK Flynn will be back with the Wire on Monday.

Have a nice weekend.

Cheers,

Obey