Good morning, Hubsters. MK Flynn here with today’s Wire.
After torrential downpours all weekend, the sun is shining brightly in New York this morning.
Here’s hoping that First Republic Bank has found a safe harbor in JPMorgan Chase & Co. and that the deal marks the beginning of the end for this year’s wave of banking woes.
In private equity deals this morning, there are plenty of bright spots.
Catching my eye are three deals announced today:
• Morgan Stanley Capital Partners is betting on a pair of residential services providers.
• Patient Square Capital is launching a new platform for medical device makers.
• And Coral Tree Partners is bringing together two companies to form an integrated communications company.
Let’s get to those deals now:
PE Hub’s Obey Martin Manayiti was the first to report that Morgan Stanley Capital Partners (MSCP) has acquired two companies that provide services for homeowners.
The market for residential services is highly fragmented and involves expenses that are often non-deferable, like fixing a leaky roof. Success in the sector is tied to the strategic and operational experience of the investor, MSCP managing director Adam Shaw told Obey in an exclusive interview.
The mid-market focused private equity team at Morgan Stanley Investment Management announced two acquisitions this morning: Allstar Services, a full-service provider of residential exterior replacement, repair and maintenance services across trades including roofing, siding, windows and gutters; and RowCal, a provider of outsourced homeowner association (HOA) property management services. Both companies are headquartered in Minneapolis.
For the residential roofing that Allstar focuses on, Shaw said the sector represents a $40 billion market and is a largely non-discretionary and non-deferrable service. Like other residential services, “residential roofing is an analog industry that is dominated by unsophisticated, undercapitalized mom and pop providers.”
Sophisticated operators can meaningfully outpace industry growth and win share. Added Shaw: “Scaled operators have been able to grow 5x industry average over the past five years, consistently driving double digit organic growth.”
For more, read Obey’s story.
Medical device makers
Patient Square Capital is investing $300 million to form Elevage Medical Technologies, a new portfolio company to support the growth of promising medical device companies.
Elevage will be led by CEO Evan Melrose, M.D., who brings more than 25 years of experience in health care across clinical, investment, and operational roles, the healthcare-focused PE firm said.
Melrose most recently served as the founding managing director of Spindletop Capital, which provided growth capital for healthcare companies. Before that, he was the founding managing director of PTV Sciences, an Austin-based venture capital firm, and served as a director with Burrill & Company, a San Francisco-based life sciences private equity/venture capital firm. He serves or has served on boards including IntersectENT, Bioventus, and BioForm Medical.
“Many medical technologies that have been in development for a decade or more are right at the cusp of making a major impact on patient lives,” said Jim Momtazee, managing partner of Patient Square. “We want to be bold in our support of that innovation and believe that partnering with Evan allows us to step aggressively into that funding void to position a number of product launches for success.”
PE Hub has seen a spate of deals involving private equity investments in strategic communications companies lately.
In April, KKR said that it would make a growth investment in FGS Global, a global strategic advisory and communications consultancy based in New York.
Also in April, Broad Sky Partners announced a significant investment in Bully Pulpit Interactive, which is based in Washington, DC.
This morning, Coral Tree Partners, a Los Angeles-based private equity firm, announced it will combine Subject Matter and Kivvit to form a new national agency that combines strategic communications, data analytics and insights, government relations, digital strategy, creative content, and advertising services into a single integrated consultancy.
The firm, with more than 200 people, will have offices in Washington, New York, Chicago, New Jersey, and an emerging presence in Miami. Together, Subject Matter+Kivvit offers clients access to experienced professionals at the top of their fields, as well as strategic business, government and media relationships that span the national landscape. The combined firm is approaching $100 million in annual revenue, becoming one of the largest independent agencies in the US, according to a statement.
“The combination of these two firms not only establishes a sizable new entity with a national footprint, but also positions the combined agency for immediate growth,” said Will Wynperle, partner, Coral Tree. “We anticipate that this is the first of a number of strategic acquisitions that help create the agency model of the future.”
On that note, I’ll sign off. I’ll be back with more private equity deals tomorrow.
In the meantime, I’d love to hear from you. Reach out to me at email@example.com