GTCR picks up the investment pace

  • Seven deals announced since January, including three in July
  • Cloud-based software provider acquired on July 30
  • Firm closed on $3.85 mln for Fund XI in January

The Chicago-headquartered buyout shop acquired cloud-based software provider XIFIN for an undisclosed amount on July 30, just two weeks after agreeing to a $480 million deal for laboratory equipment manufacturer Cole-Parmer Instrument Company. Both Fund XI investments are platform companies for the sponsor, known for buying up and consolidating companies in niche markets.

On July 8, portfolio company Opus Global Holdings, to which the firm has committed up to $450 million through Fund X for deals, acquired Hiperos, provider of supplier management and related third-party management services.

Earlier in the year GTCR acquired marketing-automation company Vocus and direct marketer Callcredit Information Group. It also earmarked up to $300 million for healthcare investments through platform Maravai Life Sciences. Callcredit Information Group was a Fund X investment.

Vocus, also a Fund X deal, will be combined with Swedish public relations company Cision, which is scheduled to delist from Nasdaq OMX Stockholm on August 15. 

“It’s definitely been a six-month period that’s (seen) a heavy pace (of deals) for us, but it’s driven by specific opportunities, not by some macro call on the overall economy,” GTCR Managing Director Craig Bondy told Buyouts. “It’s not a case where we’ve blown through our pipeline.”

GTCR’s rapid investment pace comes at a challenging time for buyers. Strong equity markets—the steep declines seen the last week of July notwithstanding—along with a large supply of credit have led to elevated pricing. That has created a strong incentive for sponsors to sell assets, rather than buy them.

Bondy said that many of his firm’s recent acquisitions were sourced through its “Leaders Strategy,” which targets opportunities in partnership with management teams with which the firm has a prior relationship. GTCR doesn’t necessarily avoid auctions this way. But it typically pursues deals in situations where the competition is more limited.

“It’s rare where (targets) don’t have some intermediary. Whether you want to call that an auction, that depends,” Bondy said. “We feel like we’re spending time in the processes where just a couple, (or) maybe two or three (firms), can analyze the opportunity and create and execution plan that will be successful.”

In the case of Cole-Parmer Instrument Co, a carve-out from Thermo Fisher Scientific, GTCR began formulating an investment thesis with a former executive in Thermo Fisher Scientific’s Life Technologies unit—Bernd Brust—last year. Brust is slated to become CEO of the company when the deal is finalized.

Brust “and his team were critical to give us the angle to the complex carve-out of that entity,” Bondy said. “It allowed us to do a transaction at a reasonable price.”

Hiperos, meanwhile, was acquired through the firm’s partnership with Opus Global, led by Chief Executive Officer Douglas Bergeron. Bergeron was previously the CEO of VeriFone, which GTCR acquired through a recapitalization in 2002 and eventually took public in 2005.  “That’s an example where Doug was looking for another partner and wanted to partner with us,” Bondy said.

It is difficult to predict whether the firm will continue at its current pace through the end of the year, Bondy said.

“Prices are high. The debt markets remain very open and robust. Deals are being priced without covenants, which perhaps allows for a little bit more risk-taking for buyout firms,” Bondy said. “And that’s where you have to be selective.”