PE Weekly: Industrials, Building Sectors Keep M&A Volume Afloat

With the year headed to a close, private equity and strategic acquirers remain active in the industrials and building markets. This week, investors targeted energy, warehouse automation and property restoration, among other verticals. Plus, new insights reveal continued growth for dry powder volumes, and forecasts for 2024 direct lending default rates.

Platform Investments

Ardian Acquires Hydropower Company. Ardian looked towards South America for its latest investment, announcing this week its acquisition of a Peru-based hydropower company. The investment comes from the firm’s Clean Energy Evergreen Fund (ACEEF) and includes the acquisition of six hydroelectric power plants. In its announcement, Ardian noted that the acquisition expands its portfolio’s geographic reach and technological diversification.

Transom Capital Acquires Flooring Products Distributor Galleher. Middle-market private equity firm Transom Capital Group announced its acquisition of Galleher, a western regional distributor and manufacturer of flooring products that are sold under both company-owned and third-party brands via retail, contractor and commercial channels. Transom plans to support the company as it invests in its core markets with new products and expands geographically, according to a press release.

Argosy Private Equity Backs Wize Solutions. Argosy Private Equity, a lower middle-market private equity firm, announced recently it has acquired a controlling stake in warehouse automation and dock & door installation business Wize Solutions. Based in Utah, Wize operates throughout the U.S., Canada, Mexico, Japan and Australia. The company installs warehouse racking systems for manufacturing and distributor clients.

Audax Provides Growth Equity to Dobbs Tire & Auto Centers. Dobbs Tire & Auto Centers, a tire retailer based in the Midwest, has secured an equity growth investment from Audax Private Equity, a recent press release said. Audax Managing Director Jason Ellis noted that Dobbs fits within Audax’s existing focus on the auto aftermarket and consumer services segments, noting, “We have been pursuing a thesis in the auto services segment for some time.”

TruArc Acquires Watchtower Security. TruArc Partners, a middle-market private equity firm, has acquired Watchtower Security, which provides video surveillance and asset protection solutions to the multi-family housing sector. The investment is not TruArc’s first in the security space: the firm previously invested in subscription-based perimeter security solution provider AMAROK. “Asset protection continues to be an active investment theme that we have great conviction in,” noted Brandon Kiss, a partner at the firm.

West Edge Partners Launches Property Restoration Platform. West Edge Partners, a private equity firm focused on the lower middle-market, announced the launch of a property restoration platform, INTACT Property Restoration. The platform debut follows the firm’s acquisitions of Flood Response and Valley Restoration, two property restoration companies that will continue to operate in their markets under their own brands.

Bain Capital to Launch Insurance Platform with GuideOne Investment. Bain Capital Insurance, the insurance investing unit of private investment firm Bain Capital, announced its investment in GuideOne Insurance and the subsequent launch of a new insurance platform. The firm invested $200 million in GuideOne, a niche-market mutual insurance carrier. Bain Capital Insurance has formed The Mutual Group, an insurance platform servicing the mutual industry, as a result.

Strategics

Calvetti Ferguson Acquires Local Dallas-Based CPA Firm. Calvetti Ferguson, a CPA and advisory firm based in Texas, has acquired Dallas-based Gummer Group, a tax-focused CPA firm that serves high-net-worth clients in the Dallas-Fort Worth metroplex with a primary focus on family offices. The acquisition will increase the headcount in Calvetti Ferguson’s Dallas office by 25% while doubling the firm’s family office practice, according to a press release.

Exits

Madison Dearborn Exits NFP to Aon in $13.4 Billion Deal. Management consulting firm Aon announced this week it plans to acquire middle-market insurance broker NFP for $13.4 billion, according to a press release. The transaction consists of $7 billion in cash and $6.4 billion of stock. The investment expands Aon’s presence in the middle-market risk, benefits, wealth and retirement plan advisory space.

Fundraising

Turnspire Capital Closes $275 Million Fund. Turnspire Capital Partners, a special situations private investment firm, has announced the close of its latest fund, securing $275 million in capital commitments. The fund, Turnspire Value Fund II, will continue the firm’s existing investment strategy, targeting complex transactions involving lower-middle market companies across the industrial and consumer sectors. The firm invests in businesses in North America and Europe, a press release noted.

Insights

PE Dry Powder Reaches New High: S&P. New analysis from Preqin and S&P Global Market Intelligence data revealed private equity dry powder value has reached a new high, jumping to $2.59 trillion globally as of Dec. 1. The figure marks an 8% year-over-year increase. Analysts point to investors’ hesitancy to deploy capital amid economic uncertainty as a major factor behind the increase.

KBRA DLD Predicts Direct Lending Default Rate for PE-Backed Businesses. New analysis from KBRA DLD, a division of KBRA Analytics that provides direct lending insights to the private equity, lender, financial and legal advisor communities, released new forecasts into direct lending default rates for private equity-backed businesses. The firm predicts a 2.75% default rate for 2024. Its year-end analysis noted that year-to-date default rates rose to 2.1%. Year-to-date default rates for high yield is at 4%, while for syndicated loans it sits at 5.6%, 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.