About the company
JSI is a consulting and broadband solutions provider to the telecommunications industry in the USA. The business offers a complete range of financial, engineering, regulatory, operational, and strategic services to telecommunications providers that are focused on rural communities.
Investment rationale
- JSI is a differentiated, mission-critical service provider with an experienced team and long-standing history of delivering a high-quality service to its customers.
- The private equity manager believes that the telecommunications industry is at an inflection point following the USA’s recently passed Infrastructure Bill, which allocated a significant budget to the deployment of fibre across the USA.
- The need to close the connectivity gap between rural and urban areas in the USA, brought to light by the COVID-19 crisis, provides an additional opportunity for market penetration and growth.
- The business has grown its revenues by c.10% per annum since 2019 and it has a diverse and sticky customer base of broadband providers across the USA.
Active management and value creation
- Stone-Goff Partners is a New York-based private equity investment firm that acquires and builds companies operating in the lower middle market. The JSI management team and Stone-Goff, which has been an investor in the company since 2018, believe that there are several growth initiatives that can be implemented by the company.
- Under Stone-Goff’s ownership, JSI has a recent track record of executing transformative M&A. The acquisitions of N-COM, an engineering firm specialising in communication systems; and Mid-State Consultants, a leading full-service engineering and outside plant firm, expanded the geographic reach of JSI and diversified the company’s product offering.
- JSI’s latest acquisition of Mitchell Engineering, a provider of engineering and design services to telecommunication clients in Arkansas, Oklahoma and Eastern Texas, continues this expansion.
- Stone-Goff sees the cross-selling of additional services obtained via M&A to JSI’s existing loyal customer base as a key route to value creation. The company has a strong M&A pipeline with which it can continue this strategy.
About the company
Prosci is a change management firm focused on helping individuals and organisations build change management capabilities. It has a network of over 30,000 change leaders worldwide through the Prosci Change Management Certification programme.
Investment rationale
- Prosci is a market-leading provider of proprietary change management solutions in a US$10bn+ market.
- Proven history of growth in core offerings positioned to accelerate with newly launched digital training and advisory solutions.
- Ten-year revenue growth of 29% per year, 40%+ EBITDA profit margins and a diversified and quality customer base consisting of c.80% of the Fortune 100 companies.
Active management and value creation
During the investment period, Leeds Equity Partners plans to focus on the following key growth drivers:
- An accelerated rollout of the advisory business.
- Bolstering the subscription segment (currently c. 30% of revenue) by rolling out a subscription membership opportunity.
- Broadening and deepening channel partner relationships.
- Expanding the business through transformative M&A.
About the company
Seqens is a global chemicals and active pharmaceutical ingredients manufacturer. The company is a leading supplier of pain relief ingredients in both the Paracetamol and Aspirin supply chains. Seqens is headquartered in France with production facilities and R&D centres located globally.
Investment rationale
- The company is a vertically integrated producer of critical products and is strongly positioned to benefit from secular tailwinds, such as western reshoring initiatives, which de-risk supply chains, and growth in pharmaceutical supply chain outsourcing.
- In addition, Seqens has historically been an undermanaged asset, and SK Capital Partners (“SK”) has identified significant value creation opportunities.
Our relationship
- Pantheon has been investing in the manager since 2018 through three primary funds. SK is a sector specialist; they are focused exclusively on the pharmaceutical, chemicals and materials industries.
Active management and value creation
- SK has strategically merged Seqens with another of its portfolio companies, Wavelength Pharmaceuticals, which is a complementary active pharmaceutical ingredients manufacturer. The combination creates a scaled leader in the sector with a global presence and multiple opportunities for synergies.
- The private equity manager believes that significant operational improvements can be made to the business to create value. The company will benefit from SK’s experience in the sector and their ability to reposition the company to drive growth both organically and through M&A.
About the company
Kroll Bond Rating Agency is one of the five global full-service credit rating agencies. The business was founded in 2010 with the aim of restoring trust in credit ratings by creating new standards for assessing risk and offering transparent ratings. It is differentiated through the quality and rigour of its research, its ability to rate niche asset classes with bespoke methodologies, and its competitive pricing.
Investment rationale
- The addressable market for credit rating agencies is large with very few players and significant barriers to entry.
- The company has a highly attractive financial profile, with a fixed cost business model and substantial pricing power, which leads to high EBITDA margins and strong cash flow generation.
Our relationship
- Pantheon has a long-standing relationship with Parthenon Capital Partners (“Parthenon”) and is an investor in several of their funds dating back to the early 2000s. Pantheon has also participated in several co-investments with the private equity manager and sits on two of its advisory boards.
Active management and value creation
- Parthenon has significant experience and an outstanding track record in the financial services sector, having made 25+ investments in financial services firms through its past six funds. With deep industry expertise and operational capabilities, Parthenon has the knowledge and resources to assist KBRA with its expansion.
- Parthenon sees numerous opportunities for growth in the business, including the penetration of new areas of the market, such as alternative asset managers and ESG ratings. In addition, international expansion and M&A are possible levers for value creation.
About the company
TriMech is a provider of 3D design, engineering and manufacturing solutions in the United States and Canada. The company was founded in 1998 and is headquartered in Virginia, USA, with locations in 15 states across the country and six further locations in Canada.
Investment rationale
- TriMech is one of the few businesses operating at scale in an attractive and growing 3D design and printing market. The global 3D computer-aided design software market is estimated to be c.US$10bn in size, and the 3D design and printing market is estimated to be c.US$14bn in size; both are expected to continue to grow in the coming years as companies utilise 3D software as part of product development.
- TriMech has a diverse customer base with long-standing relationships that provide high recurring revenues through multiple revenue streams. Sentinel Capital Partners (“Sentinel”) sees an opportunity to further diversify the company’s revenue through the acquisition of companies with complementary product offerings.
Our relationship
- Pantheon has a long-term relationship with Sentinel; it is a primary investor in three of Sentinel’s funds and has two advisory board seats with the private equity manager.
Active management and value creation
- Sentinel has worked on multiple investments with a similar profile to TriMech where M&A is a key component of growth.
- The company has made numerous accretive acquisitions in the past 18 months that have broadened its product line. It has continued to identify M&A opportunities to help consolidate the sector and provide cross-selling opportunities across complementary products, and has already completed one acquisition following our investment.
About the company
Accelerant is a technology enabled insurance exchange that connects underwriters, who do not have the capital of a traditional insurance firm, with risk capital providers. Altamont Capital Partners first backed the company in 2019 and has helped grow the business in the intervening period.
Investment rationale
- Differentiated and disruptive business model that is difficult to replicate.
- Large, growing and uncorrelated insurance market with substantial addressable market.
- Strong growth profile combined with an asset-light, highly profitable business model.
- Proven and experienced founding management team with strong alignment of interests.
About the company
CoreLogic is a provider of information and outsourced services primarily to the mortgage, real estate, and insurance sectors. CoreLogic’s services can be divided into two key segments– underwriting services (representing 66% of revenues), and property intelligence & risk management (representing 34% of revenues).
Investment Rationale
- Owner of largest residential real estate data assets in the industry, with total records spanning nearly all residential land parcels in the USA.
- Proven M&A platform well placed to acquire a broad range of potential targets in the mortgage, real estate and insurance sectors.
- Highly diversified revenue base by concentration and end market.
Our relationship
PIP is a primary investor in seven Insight Partners (“Insight”) funds and has acquired secondary interests in several Insight funds. In addition, PIP has participated in seven co-investments alongside the manager.
Active management and value creation
- Insight has built a perspective on the industry over many years, having invested in its first insurance technology deal over 20 years ago.
- The private equity manager has built an impressive track record of investing in software companies with unique data assets, which it believes will help CoreLogic better utilise its robust datasets and reposition the business into higher-growth revenue segments.
- A dedicated team of 40+ M&A professionals at Insight is expected to be a key source of value creation.
About the company
CIPHR is a UK-based provider of cloud/Software-as-a-service human capital management (“HCM”) and payroll solutions to mainly mid-market businesses. The company offers a suite of proprietary software and software from its partner network (known as ‘CIPHR Connect’), serving mainly UK customers, with several of its customers using its software in multiple geographies. CIPHR’s partner network allows greater module customisation for specific customer types.
Investment Rationale
- An attractive business model with demand driven by heightened regulation; CIPHR’s core UK HCM software market is expected to grow quickly in the next few years.
- The company operates a subscription model with a majority of recurring revenues and limited customer churn.
- CIPHR operates joint selling arrangements with partners who offer a captive pool of potential M&A targets in a fragmented market.
- ECI expects interest from a wide range of private equity and trade buyers at exit.
Our relationship
PIP is a primary investor in four ECI Partners (“ECI”) funds and Pantheon holds an advisory board seat on each fund.
Active management and value creation
- ECI was the preferred bidder for CIPHR, which the private equity manager highlights as evidence of its good relationship with the founding CEO and wider management team.
- Expansion through M&A is a core value creation strategy for ECI.
About the company
RAYUS (formerly known as CDI) is a leading provider of high-quality diagnostic imaging and interventional radiology. The company operates through a network of imaging centres, ambulatory surgery centres and mobile imaging solutions.
Investment Rationale
- The diagnostic imaging industry has experienced a payer-driven shift in scan volume to non-hospital image centres which typically cost three to five times less than hospital options.
- RAYUS has a strong M&A track record and is well positioned to take advantage of a large consolidation opportunity within the US diagnostic imaging market, which comprises of over 6,500 imaging locations and where most competitors are small operators with only one to five centres.
- The company achieved a quick recovery after the COVID-19 lockdowns as volumes were largely deferred rather than lost altogether.
Our relationship
- Pantheon has a well-established relationship with Wellspring Capital Management (“Wellspring”), dating back to 2008.
- PIP is a primary investor with Wellspring and has completed two co-investments alongside the manager.
Active management and value creation
- Healthcare is one of Wellspring’s core investment verticals and the private equity manager has built an attractive track record in the space.
- Wellspring plans to continue executing the M&A strategy that it has successfully employed since investment.
- The manager will pursue new strategic growth opportunities in existing geographies to continue to build leverage with regional payers.
About the company
Kersia was founded in 1985 as a subsidiary of Groupe Roullier. The company is a leading European provider of biosecurity, disinfection and hygiene solutions for the food and beverage, farm and healthcare industries. Headquartered in Dinard, France, Kersia operates 23 manufacturing sites and has approximately 1,800 employees.
Why invest
As a leading manufacturer servicing non-cyclical end markets with stable growth prospects, Kersia has an attractive business model with demand driven by heightened regulation and established positions in key markets. IK Investment Partners (“IK”) has prior experience in the healthcare sector and the biosecurity market in particular, with a strong focus on deal origination. Given the fragmented market and current consolidation trend, further buy-and-build to accelerate growth is anticipated. Company management has a track record of successfully integrating businesses.
Our relationship
Pantheon has an established relationship with IK, dating back to the early 2000s. Pantheon is a primary investor in eight IK funds and has acquired secondary interests in several IK funds. In addition, Pantheon has participated in a number of co-investments alongside the manager. Pantheon is an Advisory Board member in six IK funds.
Active management
Together with the management team, IK has continued to develop the company through the following value creation initiatives:
- Implemented cross-selling and operational excellence initiatives.
- Completed add-on acquisitions shortly after closing the deal (Sopura and Bio Armor).