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RedBird-backed FSG to buy Pittsburgh Penguins, Brookfield to grow ‘size and scale’ of private equity platform

The sellers are former Penguins captain Mario Lemieux and businessman Ron Burkle, who acquired the team in 1999; Brookfield’s plan is to bring its PE platform in line with its most established platforms, such as real estate.

It looks like high-profile sports investor RedBird Capital Partners is making good on a pledge to help grow its new portfolio company Fenway Sports Group. FSG officially announced an agreement to buy the Pittsburgh Penguins, the legendary hockey franchise that won the Stanley Cup five times (1991, 1992, 2009, 2016 and 2017).

Terms weren’t disclosed for the much-anticipated deal. A good proxy is the $845 million valuation recently given to the Penguins by Sportico, which ranked the team 15th in the NHL.

The sellers are former Penguins captain Mario Lemieux and businessman Ron Burkle, who acquired the team in 1999. The transaction, expected to wrap up before the end of the year, will see them remain part of the ownership group.

The announcement comes roughly a month after FSG invested in SpringHill, a consumer and entertainment company founded by NBA star LeBron James and businessman Maverick Carter. Valuing SpringHill at $725 million, that deal also included RedBird, Nike and Epic Games.

FSG was anchored by the Boston Red Sox and Liverpool Football Club when RedBird made its initial investment in March. James and Carter were also part of that deal, as was businessman Paul Wachter. Awarding FSG with an enterprise value of $7.35 billion, it is RedBird’s largest transaction to date.

RedBird was founded in 2014 by Gerry Cardinale, a veteran of Goldman Sachs’ PE business. In the same month it backed FSG, the firm closed fundraising for RedBird Series 2019, securing $2.6 billion for the flagship and co-investment pools, Buyouts reported.

In case you missed it because of Thanksgiving Day festivities, check out Buyouts story about the launch of Brookfield Asset Management’s latest flagship buyout fund. Brookfield Capital Partners VI is targeted to raise $12.5 billion, sources said, though the hope is to bring in as much as $15 billion.

Brookfield, which typically makes hefty commitments to its flagship vehicles, is likely to invest $3 billion to $4 billion, sources said. The firm declined to comment.

There are two interesting aspects to this story. The first is Brookfield’s ambitious plan to make its $91 billion PE platform “the same size and scale” as its most established platforms, such as real estate. That’s according to Cyrus Madon, head of the private equity group.

This is being done in part by introducing new strategies, such as a tech-focused growth strategy and a large-scale non-control strategy. A fourth strategy for long-term investing is also being designed, Buyouts reported earlier. Broadening PE makes sense as it is “the highest performing” of Brookfield’s alternative assets, sources said.

The second is Brookfield’s aim, under Fund VI’s banner, to dive into the red-hot healthcare and tech sectors. The groundwork for this was laid in a pair of debut deals: the 2019 acquisition of Australia’s Healthscope and this year’s purchase of Singapore’s Everise.