KRG Capital sells ATI Physical Therapy — again

ATI Physical Therapy, with its sale to Advent International, finds itself owned by a private-equity firm for a fourth time.

Advent said March 29 that it agreed to buy a majority of ATI, a Bolingbrook, Illinois-based outpatient physical-therapy provider. Terms weren’t announced. The deal is valued at $1.5 billion to $1.75 billion, a source familiar with the situation said.

Founded in 1996, ATI provides research-based physical therapy, workers’- compensation rehab, employer worksite solutions and sports medicine. It operates more than 500 clinics across 19 U.S. states. ATI produces about $100 million of Ebitda, press reports said.

The sale to Advent represents a three-year hold for KRG Capital Partners.

It’s also the second time KRG has owned ATI. KRG first invested in ATI back in 2005. It sold the company in March 2010 to GTCR. In December 2012, GTCR sold its interest in ATI back to KRG.

The current sale to Advent is expected to close in second quarter. Advent then will be the third private-equity firm to own ATI.

KRG used its third fund, which raised $715 million, to invest in ATI the first time. For its second dip, KRG invested from its fourth fund. KRG Fund IV closed at $1.96 billion in 2007. ATI paid out a dividend to KRG during its ownership. The company issued a $100 million distribution in December 2014, Moody’s Investors Service said.

The firm last year offered LPs of Fund IV the ability to sell their stakes to a preselected buyer, Buyouts reported in July. Credit Suisse ran the process, the story said. The offering was also intended to raise an undetermined amount of capital for Fund V.

KRG Fund IV generated a 7.9 percent IRR and a 1.3x investment multiple as of June 30, 2015, for the Sacramento Private Equity Partners portfolio of the California Public Employees’ Retirement System, Calpers performance data said.

The PE firm is currently fundraising for its fifth pool, Buyouts reported. Fund V is seeking $500 million and has so far raised $148.4 million, or 30 percent of its goal, Buyouts said.

Richard Agabs and Keith Lockwood of Jefferies, along with UBS, provided financial advice to ATI while Hogan Lovells was the company’s attorney.

Barclays served as financial advisor to Advent while Weil, Gotshal & Manges LLP and McDermott Will & Emery provided legal advice.

Advent and Credit Suisse declined comment. KRG could not immediately be reached for comment.

Action Item: To contact ATI: atipt.com/contact.

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