Happy Monday, Hubsters. MK Flynn here in NYC, back from London and back on the Wire.
$175k average payout for truck drivers and hourly workers. KKR just announced an exit that not only gives the firm outstanding returns but also shows the impact of employee ownership, long advocated by Pete Stavros, co-head of Americas private equity.
The firm is selling C.H.I. Overhead Doors, a manufacturer of garage doors, to Nucor Corp. in a transaction valued at $3 billion. The sale represents one of KKR’s largest returns in recent history, at 10 times the original equity invested, inclusive of distributions. All C.H.I. employees will receive a substantial cash payout on their equity in the company.
The deal offers strong evidence in favor of KKR’s thesis that employee ownership and engagement is “a key driver in building stronger companies and driving greater financial inclusion.”
Ownership works. Employee ownership is growing at private equity-backed companies. Back in April, KKR and more than 60 partners launched a nonprofit called Ownership Works, with a mission to increase prosperity by sharing ownership with all workers.
Other investment firms participating include Apollo, Ares, Goldman Sachs, Silver Lake, TPG, Warburg Pincus. Pension funds, such as California Public Employees’ Retirement System and Washington State Investment Board, are also involved. The participating PE firms have pledged to institute employee ownership at a minimum of three portfolio companies by the end of 2023.
More capital. Water Street and JLL Partners closed one of the rare types of continuation fund deals – a joint process that gives the firms more time and capital to grow the asset called Eversana, which provides commercialization services to the life sciences industry, Buyouts’ Chris Witkowsky reports.
The deal, which is valued at $1.75 billion and closed in March, “is among a slew of single-asset secondaries GPs are using to extend their holds over certain assets where they see continued growth,” Chris writes. “Single-asset continuation fund deals have become so popular that several mid-market investment banks have hired or are seeking talent to advise on such transactions.”
Other large deals this year include KKR’s single-asset process for Internet Brands and Warburg Pincus’ GP-led deal for Duravant. GP-led deals represented roughly 51 percent of the $134 billion of total deal volume in 2021, according to Evercore’s 2021 volume report.
What does private equity bring to the table? I’ve received a lot of responses to the questions I posed last week in the Wire about the nature of private equity.
How much of PE is financial engineering versus true company building? What are the benefits of the private equity model? I’ll be including readers’ comments in the Wire later this week. If you’d like to weigh in, send me your thoughts at mk.flynn@peimedia.com.
That’s all for now.
Until tomorrow,
MK
Read the full wire commentary on PE Hub ...
