Return to search

Red Arts Capital buys Coregistics, aiming to triple revenue in five years

'We are really bullish on-ecommerce,' said RAC's Chad Strader. 'That trend is going to continue to disrupt and revolutionize supply chains.'

Red Arts Capital will announce later this morning that it has acquired Coregistics, a packaging services provider. PE Hub caught up with RAC’s co-founders and managing partners Chad Strader and Nicholas Antoine to learn more about why the Chicago-based private equity firm is betting on servicing the supply chain.

Operating from 17 centers in the US, Coregistics provides packaging-related services, including material sourcing and procurement, third-party logistics (known as 3PL) and contract packaging.

The packaging industry presents an opportunity for aggressive growth, said Strader and Antoine. RAC expects to triple Coregistics’ revenue during its hold period, which is typically five years.

“When we started Red Arts Capital, we felt like the trend was going to continue and even accelerate faster, and that is what we have seen with Coregistics,” explained Strader in reference to the packaging sector. “Some of our customers are very large Fortune 500 [consumer packaged goods] companies, retail companies, electronics, health, beauty and accessories as well as pharmaceuticals.”

Growth will be spurred along multiple fronts, added Strader. “There are a couple of key themes that we will focus on the next couple of years.”

And one area gets high priority: “We are really bullish on e-commerce,” he said. “That trend is going to continue to disrupt and revolutionize supply chains.”

RAC is also banking on shifting trends, whereby many North American companies are localizing their procurement through near-shoring and re-shoring. “If you think about the challenges that companies faced with China and Asia-Pacific Ocean Freight, we believe that there is going to be a big push to bring back manufacturing and packaging into the US,” Strader said.

Chad Strader and Nicholas Antoine, Red Arts Capital

With the Coregistics deal, RAC will be looking forward to unlocking new markets, especially within uncharted sectors such as healthcare. “We are looking forward to having a big focus on new business development, tackling new markets and verticals,” he said, while referencing Coregistics’ involvement in the distribution of vaccines as evidence that the company has the potential to hunt for new business opportunities.

Growth for Coregistics will also be coming inorganically. “There are a number of fragmented family businesses in the packaging space,” Strader said. “I would imagine over the next several years, we are going to have a pretty aggressive merger and acquisition strategy to accelerate their revenue growth.”

Supply chain challenges are set to persist, although most challenges will be specific to different regions. Antoine said, “Some cities and some locations may have better access to supply than others, but I do see this continuing for the rest of the year, and probably next year as well.”

Antione added that the firm will be investing more in technology to smooth some of the challenges that have plagued the supply chain. This includes increasing automation in warehouses so that they deploy labor more efficiently.

Turning to the current macro-economic challenges that are influenced by rising inflation, the firm expressed confidence that its supply chain and packaging business will be able to weather the storm due to its strong pricing power and continued demand for its services, even in a recessionary environment.