Red Arts Capital picks up packaging services provider; ICG buys Seaway

Good morning, dealmakers. MK Flynn here with the Wire.

It’s been a prolific and productive week for PE Hub reporter Obey Martin Manayiti (who can be reached at obey.m@peimedia.com).

He’s written three exclusives in two days. Yesterday, Obey broke the news that Ara Partners bought Genera Energy, a maker of non-wood, agricultural pulp-and-molded-fiber products used for packaging.

Today, he was the first to report on two more deals:

Supply chain solutions. Red Arts Capital has acquired Coregistics, a packaging services provider. Obey 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.

RAC expects to triple Coregistics’ revenue during its hold period, which is typically five years.

Unlocking new markets, such as healthcare, is one area of planned growth.

“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.

Acquisitions are also on the horizon.

“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.”

For more, read Obey’s story.

Medical devices. ICG has bought Seaway Plastics Engineering, a provider of injection-molded, engineered components and value-added services for the medical device, healthcare and specialty industrial sectors. (Note: There’s more news from London-listed ICG Enterprise, below.)

Obey spoke with Uzair Dossani, managing director of ICG’s North American direct private equity group, and Kevin Gregory, the firm’s healthcare sector lead, about how the deal symbolizes ICG’s investment thesis.

“We take a very thesis-driven approach to investing,” Dossani said. “We spend a lot of time in our sectors identifying themes and trends that we like, and then we proactively look for businesses that allow us to play the theses that we identify. It’s important because it allows us to develop conviction outside of the constraints of a typical sale process, to make better investment decisions, and to be more effective board members and owners.”

ICG spent a year looking to make a platform investment in the medical device sector and evaluated many opportunities.

“When we came across Seaway, we knew we had found what we were looking for in a platform investment: a great management team, strong organic growth, blue-chip customer base with great retention, strong systems and demonstrated success with add-on M&A,” Dossani explained.

For more, read Obey’s story.

Secondaries. London’s ICG has collected more than $5 billion for the largest fund dedicated to GP-leds, according to Secondaries Investor, which broke the news.

“The vehicle, Strategic Equity IV, is the largest pool of capital ever raised for such transactions and shows that investors of the likes of the California State Teachers’ Retirement System, Los Angeles City Employees’ Retirement System, New York City Employees’ Retirement System and Oklahoma State Regents For Higher Education reckon this is a strategy worth backing,” writes Adam Le.

See Adam’s story.

Don’t call us, we’ll call you. The number of capital calls made by private equity firms has dropped, according to data from Investec. Fund managers have increasingly been looking to subscription lines to simplify investments, reports Madeleine Farman, who joined Private Equity International as a senior reporter in May.

“Feedback from investors is they don’t want to be called five times a year. They want to be called twice a year,” Richard Hope, head of EMEA at Hamilton Lane, told Madeleine. “You don’t want to be… calling your LPs out of bed on holiday to make sure they’ve sent the capital call… The use of the fund facility technology allows you to smooth that.”

For more, read Madeleine’s story.

Operational Excellence. Time is almost up to nominate a best-in-class operator for Private Equity International’s Operational Excellence Awards 2022. The deadline is Friday, 24 June.
Find details and the entry form here.

That’s all for now. PE Hub’s Aaron Weitzman writes the Wire on Fridays, so I’ll see you next week.

All the best,

MK