Good morning, dealmakers.
MK Flynn here, welcoming you aboard on a sunny Thursday morning in New York.
On deck today: Infrastructure investing, lower mid-market healthcare deals, Italian cuisine and a big secondaries sale.
Safe flow. We’ve been predicting a wave of infrastructure deals this year, and this morning KKR proved the point.
The New York PE firm has agreed to buy a majority stake in Boasso Global, a provider of depot, maintenance, cleaning, and transportation services for the ISO tank container industry in North America and Europe, from Apax Partners, for undisclosed terms.
“Boasso utilizes its network of assets to provide essential services to operators of ISO tanks, facilitating the efficient and safe flow of chemical and food grade products that are critical to the global economy,” said Dash Lane, partner on KKR’s infrastructure team. “Our patient, long-term oriented capital is well positioned to support Boasso’s network of facilities, its employees and its customers in their next phase of growth.”
Apax bought Boasso in 2015 as part of its purchase of Quality Distribution, a global logistics and transportation provider. In 2021, Quality Distribution sold its Quality Carriers bulk liquid chemical transportation business to CSX Corp. As a result of that transaction, Boasso became a standalone entity.
KKR launched its global infrastructure strategy back in 2008 and has since made more than 65 investments in the sector. The Boasso investment is being made from KKR Global Infrastructure Investors IV fund, which focuses on critical infrastructure investments in North America and Western Europe.
Recession resilient. “In today’s market, I’m not going to be naive to think or to say that nothing that happens at the macro level will affect us in the lower-mid market,” Buddy Gumina, founder and managing partner of Grant Avenue Capital, told PE Hub’s Aaron Weitzman. “But I will say that lower mid-market healthcare, in and of itself, appears to be more recession-resilient than other healthcare categories.”
Gumina spoke with Aaron for our ongoing series profiling PE firms that invest in healthcare. He founded Grant Ave in 2019.
The New York firm has made three platform investments: Fortis Health Services, H2 Health and QHR Health, all of which have been proprietary carve-outs that the firm sourced directly.
“Though many kinds of strategies can be successful, I believe there is an extraordinary opportunity in the lower mid-market and in healthcare specifically,” Gumina said.
“Just think about the near-term healthcare demand dynamics,” he continued. “In the next ten years, we expect to go from $4 trillion of healthcare spend in the US to $6 trillion, not to mention the fact that the country will have 15+ million additional people aging into Medicare. With this increase in demand as a backdrop, I believe that the benefit of being a participant in the lower mid-market healthcare space is that there are so many more opportunities to invest in sub-sectors. And when I say opportunities, I do not just mean the raw number of companies in which to invest, but the opportunities for consolidation – to execute a buy-and-build and get really creative.”
For more on the firm’s investment strategy and deals, click here.
Abbondanza! Head on over to PE Hub Europe, where reporter Nina Lindholm shares the ambitious plans Investindustrial has to expand posh Italian marketplace chain Eataly.
London-based Investindustrial last month took a majority stake in Alba-based Eataly, which promotes and sells food made in Italy. The company has been in operation for almost 20 years and has locations throughout the world.
Investindustrial’s managing principal, Antonio Gatti, and senior principal Carl Nauckhoff explained the PE firm’s strategy.
“For the moment, Eataly is only one format, but the plan is to make it nimbler,” Gatti said. “For example, Eataly in airports works extremely well. But there’s only one Eataly at an airport – in Rome.”
He continued: “Why only have one store in Chicago, or just two stores in New York, when you could have 10 stores in New York with smaller formats?”
To find out more about the PE firm’s plans and about other Italian food companies in its portfolio, read Nina’s full story on PE Hub Europe.
Dealflow. The Eataly investment is just one deal covered by the PE Hub Europe team today.
For more on European deals from PE firms including Corsair, Hg and Triton, check out today’s Dealflow newsletter, written by editor Craig McGlashan.
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Tender offer. On Buyouts, Chris Witkowsky reports that Carlyle Group is running a large process that would allow investors in its seventh fund to cash out of their stakes in what many industry observers are viewing as a test of the secondaries market, sources told Chris.
“The process, known as a tender offer, is among several options GPs have to deliver liquidity back to LPs at a time when distributions and fundraising are slowing,” Chris writes. “LPs and GPs are on the hunt for liquidity in the absence of traditional exits, and secondaries is one potential outlet.”
A spokesperson for Carlyle declined to comment.
Here’s more from the story:
Carlyle, working with Evercore as secondaries adviser, has solicited bids from potential buyers and is expected to select a winner soon, sources said. Once the buyer is selected, the offer will be presented to Fund VII LPs. Carlyle closed Fund VII on $18.5 billion in 2018.
Carlyle’s deal would also include a shot of fresh capital from the buyer into the firm’s eighth fund, which is in the market fundraising now. Fund VIII is targeting $22 billion and raised at least $13.5 billion, according to the firm’s second quarter earnings report. Buyers agree to a staple of fresh capital in a tender offer based on a ratio. For example, buyers typically offer $1 of fresh capital for every $2 or $3 of secondaries sales.
The deal has the potential to be huge, or to fizzle out, depending on the level of LP selling. The fair value of Fund VII as of June was around $22 billion, according to Carlyle’s second-quarter earnings report. Even a relatively small uptake of 10 percent of the LP base selling would be a more than $2 billion secondaries sale. The staple on top of a $2 billion sale would be significant, depending on the ratio of secondaries to staple capital on the deal.
You can read the whole story here.
That’s all for now. Aaron writes the Wire on Fridays, and I’ll see you back here on Monday.
All the best,