Good morning, Hubsters. MK Flynn here with the Wire on a sunny but chilly morning in New York.
Today, we’ve got several exclusive interviews with private equity pros about recent deals.
The first was announced this morning by LLR. Then we look at a recent investment from KKR and finish with one by Tikehau.
The PE Hub Europe team is also keeping an eye on a pair of IPOs, yes IPOs.
And in PE other news, you probably saw that Carlyle just released its fourth quarter earnings, with mixed results. The firm beat its distributable earnings target but missed Wall Street’s revenue mark as profit fell sharply.
As we reported, yesterday, Carlyle announced former Goldman Sachs exec Harvey Schwartz will step into the CEO role February 15.
Post-acute healthcare. LLR Partners announced earlier today that it has acquired a majority stake in Viventium, a Brooklyn-based developer of software aimed at handling workforce management in post-acute healthcare.
Existing investors, ABS Capital Partners, Camden Partners and Viventium’s founders have maintained minority stakes. The deal closed January 31.
PE hub’s Georgina Tzanetos spoke with LLR partner Sasank Aleti, who joined Viventium’s board. The Philadelphia-based, lower-mid-market private equity firm intends to help scale Viventium’s growth and look for M&A opportunities, Aleti said.
Viventium’s software aims to create seamless API integrations with workforce management systems and preferred partners to create a frictionless experience for post-acute-care providers and their employees.
Post-acute healthcare encompasses home-care agencies, skilled nursing facilities, hospices and in-patient rehabilitation services, to name a few.
Employee turnover in those markets can be sometimes upwards of 50 percent, Aleti said. “In order for those businesses to operate, they need nurses and care workers to get into the facilities, and that high turnover makes things very difficult to serve their patients if they don’t have their people.”
Workers in the post-acute market must adhere to the varying payroll systems, laws and tax jurisdictions of each state they work in, which can oftentimes differ greatly.
“To factor all of that in an automated way is something Viventium has done a really good job of, because they built a lot of these workflows into the software, whereas other payroll companies don’t really have that purpose-built functionality,” he said.
The application is “very sticky and highly recurring” Aleti added, but the specific market vertical is what made the investment attractive. “It’s payroll for the post-acute market, and that’s a market that has really challenging human capital dynamics in terms of retaining, paying and engaging employees.”
LLR has made similar investments in the past, most notably Corestream, a developer of benefits software systems for employees, and CareATC, an employee-population health management system.
Durable secular trends. New innovations, the complexity of the supply chain and long-term trends in the instrumentation manufacturing and distribution industry are attracting KKR to invest in the fragmented Testing, Inspection and Certification (TIC) subsector.
Through its Ascendant strategy, KKR is committing up to $250 million in funding for the new executive-led TIC platform fronted by longtime senior industry executives Amit Agarwal and Andy Silvernail.
PE Hub’s Obey Martin Manayiti caught up with Brandon Brahm, partner and co-head of KKR’s Ascendant strategy, as well as Agarwal, to discuss the opportunities.
“This is a sector that we followed for years, and it has a lot of really great characteristics that we like,” Brahm said. “Markets such as life sciences and food safety have durable secular trends, where the products and services are very technical and mission-critical, and yet the markets are very fragmented.”
“The idea here is that there are customers who have all these technical instruments that they are using that are constantly getting more innovative and complex,” Agarwal said. “They need somebody to come in and simplify it for them, to be able to support them with services ensuring maximum utilization.”
Agarwal, who will serve as CEO of the new platform, brings a wealth of experience as a leader in life sciences equipment provider companies, including Thermo Fisher Scientific and OMEGA Engineering. Silvernail, who will serve as the chairman, has led several companies, including Madison Industries, Rexnord; IDEX Corporation, Newell Rubbermaid and Danaher.
Looking to the future, Brahm said: “Because of the team that we have assembled with Amit and Andy and our capabilities, I think there is an opportunity to build something really scaled and potentially global in nature.”
High precision. Tikehau Capital will leverage trends in the aerospace industry to boost the consolidation plans for its recent acquisition of Formecal – a manufacturer of high-precision machining for the aerospace industry. PE Hub Europe’s Nina Lindholm spoke with Tikehau executive director Miguel Cavero, and Carmen Alonso, CEO for Iberia and the UK.
In early January, Tikehau acquired 100 percent of Madrid-based Formecal from Grupo Amper, via its Aerofondo fund. Formecal, a company specialising in hot-stamping, high-precision machining and the assembling of complex parts for aerostructures, will become part of a consolidation and growth project alongside Madrid-based Acatec, a high-precision machining company acquired by Aerofondo in October.
“Acatec and Formecal are very synergistic,” Cavero told PE Hub Europe. “As a matter of fact, the acquisition of Formecal has been done as an add-on. It won’t be an immediate merger, but it will gradually happen.”
The market in Spain is fragmented across verticals, according to Cavero, but especially so in the aerostructures and precision parts vertical. “We believe Spain has a big opportunity in terms of consolidation,” he added.
Tikehau is betting on the travel industry and the secular trends pushing it towards its pre-covid heights. “We believe globalization, and the fact that the growing middle class in Asia is going to demand flights, are some of those long-lasting trends,” said Cavero.
Formecal, in comparison to Acatec, works more within the defence sector, another segment where Tikehau sees opportunities. The sector wasn’t as badly hit by covid as the civil side of aerospace, and the war in Ukraine offered a “new geopolitical picture, in which we’ve woken up and seen that we no longer live in a Disneyland world as there are wars around us, and we need to defend ourselves,” said Cavero. “This brings a very good opportunity to the defence sector as a whole.”
Going public. Also on PE Hub Europe’s radar today are a closely-watched pair of public debuts.
Craig McGlashan writes: After a drop in IPO volumes last year, dealmakers are likely paying close attention to a pair of live European listings – and gathering what it can tell them about making their own exits. Both deals have private equity involvement.
Italian industrial firm EuroGroup’s IPO appears to be performing well, with a bookrunner note telling buyers to place orders in the top half of the €5-€6 price range, according to a Reuters report. The firm plans to raise up to €448 million through the sale of new and existing shares. Books close at the end of today. French private equity firm Tikehau Capital is selling part of its stake in EuroGroup via the IPO.
Meanwhile, German web hosting company IONOS, in which private equity firm Warburg Pincus has a minority shareholding, set a price range of €18.50-€22.50 a share in late January for its IPO on the Frankfurt Stock Exchange.
But the firm has dropped its range to €18.50-€19.50, according to a separate Reuters report. But books were fully covered shortly after the launch in late January. Books are set to close at 1pm London time today.
Tune into to tomorrow’s Dealflow when Craig will provide an update.
That wraps up our coverage for today. Buyouts’ Chris Witkowsky will write Wednesday’s Wire. I’ll be back on Thursday, and Obey will wrap up the week on Friday.
Happy dealmaking,
MK
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