PE Weekly: Dealmakers Go Global with Cross-Border Dealmaking

Though a relatively slower week in middle-market dealmaking, investors continue to demonstrate optimism for months ahead: KKR just closed its first fund dedicated exclusively to middle-market investments, while new analysis from EY showed a strong bump in M&A volume and deal value in July. This week, dealmakers made moves across borders, with an India investor acquiring Motel 6’s parent company, and Stellex Capital Management taking a majority stake in a U.K. company. Read more below.

Platform Investments

Stellex Capital Acquires U.K.-Based Fox Brothers. Stellex Capital Management, a middle-market private equity firm, has announced its acquisition of U.K.-based construction and infrastructure services and materials provider Fox Brothers Holdings Group. The majority investment will see Fox Brothers merge with J A Jackson, a quarry operator and producer of recycled materials for the construction sector, to form a fully integrated construction materials solutions business.

Godspeed Acquires Aviation Design Business BNP Associates. BNP Associates, an air transport design and engineering company, announced this week it secured a strategic investment from lower middle-market private equity firm Godspeed Capital Management, which focuses on the defense and government services space. The investment establishes BNP as the platform brand of the firm’s new aviation-focused design and engineering services provider.

Thompson Street Backs Elevator Safety Business. Private equity firm Thompson Street Capital Partners announced it made a growth investment in ATIS, an elevator and escalator safety inspection and managed services provider. Support from Thompson Street will help grow the company through expanding its sales and marketing investments, introducing new service offerings and making strategic acquisitions.

Add-ons

Rainier Partners’ Omega Fitness Acquires New Gyms. Omega Fitness, an Anytime Fitness franchisee backed by lower middle-market private equity firm Rainier Partners, has acquired 21 gym locations from MDS Fitness. The tuck-in acquisitions broaden Omega’s footprint as the second-largest Anytime Fitness platform in the U.S., a press release noted.

Strategics

Aeroseal Acquires Advanced World Trading. Aeroseal, an air sealing solutions provider for HVAC ductwork and building envelopes, announced this week its acquisition of Saudi Arabia-based Advanced World Trading. According to an announcement provided to Middle Market Growth, as part of the transaction Aeroseal has rebranded the business to Aeroseal Arabia, supporting Aeroseal’s international expansion. Aeroseal is a subsidiary of parent company JMD Corporation.

Exits

Blackstone Exits Motel 6 Parent G6 Hospitality. Investment firm Blackstone is selling the parent company of brands Motel 6 and Studio 6, G6 Hospitality, according to a recent announcement. India-based hotel operator Oyo and its parent company Oravel Stays will acquire the assets in an all-cash transaction for $525 million. The deal is expected to close by the end of the year.

Fundraising

KKR Closes $4.6 Billion Fund for Midmarket Investments. Global investment firm KKR has closed its Ascend Fund with $4.6 billion raised, according to a press release. The fund will focus on middle-market investments in North America. The fund was originally launched as part of KKR’s Americas Private Equity platform, but Ascent is KKR’s first fund focused exclusively on the middle market, the firm noted. The fund will target investments in the consumer, financial services, healthcare, industrials, media, software and tech-enabled services markets.

Insights

New Private Equity Firm, Composition Capital, Launches. A new growth equity firm, Composition Capital, has made its debut to focus on technology investments. The private equity firm was founded and is co-led by Nishita Cummings and Leon Chen and is based in Los Angeles. The firm will focus on the lower-middle market, targeting technology and tech-enabled businesses in the healthcare, financial technology, supply chain and logistics, and enterprise software spaces.

July M&A Jumps 42% Month-Over-Month: EY. Recent data from EY finds a 42% increase in U.S. M&A activity in July compared to June levels, with $124 billion in recorded deal value. Volume increased 33% in the month and 51% year-over-year, with 141 transactions recording, according to EY’s M&A activity: August 2024 report. Investments are fueled by the expectation of interest rate cuts, financial market strengthening and valuation moderation, analysts noted.

Middle Market Growth is produced by the Association for Corporate Growth. To learn more about the organization and how to become a member, visit www.acg.org.