KKR reportedly buying stake in FGS Global; Audax veterinary deal embodies PE trends

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

While many people are focused on the holidays this week, there’s at least one large deal reportedly in the works:

KKR is “nearing a deal to buy a large stake in FGS Global that will value the WPP-backed financial communications company at about $1.4bn, according to people with knowledge of the matter,” reported the Financial Times earlier this morning.

The PE firm is expected to “acquire more than 30 per cent of FGS from a combination of senior employees at FGS as well as advertising company WPP, the people said. WPP, which owns about 57.4 per cent of the company, is expected to retain a majority in the business, which will allow it to continue to consolidate the group’s accounts.”

FGS, KKR and WPP aren’t commenting, but we’ll be on the lookout for an announcement, which could come as soon as next week.

Speaking of KKR….

Earlier this week, PE Hub and Buyouts announced our Deals of the Year.

KKR took away the overall Deal of the Year award for its purchase of CHI Overhead Doors, as I wrote about in Monday’s Wire.

KKR won another category too. More on that, below.

But first, let’s take a look at a deal announced this morning that embodies several trends.

Keep on adding on
This is the year of the add-on, sources tell us. And while some of the deals are too small to warrant a lot of attention, every now and then one comes along that catches my eye.
This morning, a deal made by a portfolio company of Audax Private Equity is particularly interesting, because it reflects several trends in private equity dealmaking, including: PE interest in the popularity of pets, which continues post-pandemic; the role women are playing in veterinary care; and the rise of employee ownership in PE-backed companies.

Here are the deal details:
Veterinary Practice Partners, a King of Prussia, Pennsylvania-based company with 125 animal hospitals across the US, acquired Caring Hands Animal Hospital, an Alexandria, Virginia-based network of eight veterinary hospitals in Maryland and Virginia.

Audax made its in initial investment in VPP in December 2021.

Through the transaction, VPP and Caring Hands are elevating 21 associate doctors to become equity partners, of whom 17 are women.

Dr. Michelle Vitulli, founder, and co-owner of Caring Hands Animal Hospital, “is an amazing leader in the profession and an inspiration, for younger doctors and for me,” said Dr. Doug Aspros, chief veterinary officer at VPP, in a statement. “This partnership reflects our combined mission with Caring Hands to make ownership a reality for as many doctors as possible, particularly female leaders who have played a fundamental role advancing veterinary care in recent years.”

Secondaries success
KKR “pulled a rabbit out of a hat in its syndication of Internet Brands during a brutal market climate,” writes Buyouts’ Chris Witkowsky.

The move earned KKR our award for Secondaries Deal of the Year.

Here’s an excerpt from Chris’ award profile:

Syndicating a large GP-led deal out to a large group of investors is never an easy prospect. But once uncertainty crept into the market and started to widen the spread between buyers and sellers, large deal syndication became nearly impossible.

Not to mention that Internet Brands was a tech asset at a time when anything with a hint of tech was starting to be eyed suspiciously, considering the high valuations such assets traded over the past few years.

But in every wobbly market, a few deals always stand out as transactions that will get done despite the gloom and doom. Last year, Internet Brands was such a deal.

Amid the market turmoil, KKR and the adviser on the process, Lazard, successfully syndicated more than $1 billion of the deal out to an investor group.

The deal closed with Internet Brands moved out of KKR North America Fund XI and into a $2.2 billion continuation fund, giving the firm more time and capital to continue growing the asset.

The challenge, and the success, of the process is why KKR’s Internet Brands single-asset deal is our Secondaries Deal of the Year. In a year that started out strong but eventually saw secondaries activity slow as the year progressed, a deal of this scale successfully finding completion is notable.

That feels like a fitting end to today’s newsletter.

PE Hub’s Obey Martin Manayiti will be back with tomorrow’s Wire, and I’ll see you on Monday.

Until then, I’m wishing you a happy season, whether you’re observing Passover, Ramadan, Easter or Spring!

Cheers,

MK