PitchBook’s Investor Spotlight: ABRY Partners by Kevin Dowd, PitchBook
ABRY Partners has come a long way since 1989, when the firm closed its first private equity fund on $35 million. Today, ABRY is in the midst of investing its eighth flagship fund, a $1.9 billion vehicle. So far in 2016, the firm has been putting all that capital to very active use.
ABRY has already completed 20 deals this year, fourth-most among all PE investors. That figure puts the firm on pace to increase its deal count for the seventh year running. After activity plummeted in the wake of the 2008 financial crisis, ABRY now looks healthier than ever.
In this inaugural edition of our Investor Spotlight, we break down ABRY Partners’ investment strategy, recent deals, key decision makers, fund performance and more. All the data in this article comes from the PitchBook Platform.
ABRY Partners History
In 1989, Andrew Banks and Royce Yudkoff left the media practice at Bain & Company and leant their initials to a new private equity firm, raising $35 million for a debut fund and, in 1995, $250 million for a follow-up. Throughout the 1990s, ABRY Partners emerged as a major investor in the media sphere, embarking on a broadcasting acquisition spree that included buys of Pinnacle Towers, Sullivan Broadcasting, Nexstar Broadcasting, Citadel Communications and Connoisseur Communications.
All the while, fresh capital streamed in. The firm raised $575 million for its third fund in 1997 and $750 million for a successor in 2000. In fact, each of the firm’s eight flagship funds have been larger than the last, demonstrating a continual increase in LP interest.
To date, ABRY has pumped more than $42 billion into LBOs and other PE deals, spread across more than 450 separate transactions. The firm currently has $11.1 billion in AUM.
ABRY is one of the world’s busiest investors in media; its 15 deals completed in the space since 2010 are the third-most among all PE buyers. The firm also targets companies involved with business services, healthcare services, information services, communications and education. The bulk of its deals are LBOs or add-ons, but ABRY also invests in recapitalizations, consolidations and growth rounds. The firm focuses on late-stage, profitable businesses, typically investing between $25 million and $150 million and holding companies in its portfolio for between three and seven years.
Peggy Koenig, Managing Partner & Co-CEO
By all accounts an ABRY lifer—she’s worked for the firm since 1993—Koenig’s primary investment sectors include media, business services, information and both B2B and B2C. She serves on the Board of Directors at Inmar, a tech-driven logistics business, and translation services provider LanguageLine.
Jay Grossman, Managing Partner & Co-CEO
Another fixture at ABRY, Grossman has been with the firm since 1996. He specializes in broadcasting and media deals, having led past ABRY investments in Atlantic Broadband and Nexstar Broadcasting Group.
Erik Brooks, Managing Partner
While he’s also led investments in education, information services, healthcare and more, the media and communications sectors are Brooks’ clear forte. Investments include Music Reports, an advisor to broadcasters on copyright, licensing and royalty issues, and Kidz Bop, which makes compilation albums featuring groups of children performing covers of contemporary pop songs.
C.J. Brucato, Partner
In his two decades at ABRY, Brucato has focused his investments in the media, communications and business & information services sectors. The Princeton graduate put that experience to use as a Board member of LanguageLine and Emerging Market Communications, a provider of communication services from remote locations.
Brent Stone, Partner
An ABRY employee since 2002, Stone focuses on deals involving healthcare and education. But his real specialty is insurance, having represented the firm on deals with Confie Seguros, NSM Insurance and York Risk Services Group.
During the past five years, ABRY’s activity has been focused almost entirely on information technology, financial services and B2B, with a smattering of healthcare and B2C deals mixed in. Since 2013, nearly 90% of the firm’s transactions have been focused on those three primary sectors.
Over the same span, a similar majority of the firm’s deals, about 87%, have been completed in the U.S. Early on in 2016, though, ABRY is showing an inclination to explore other areas of the globe, with four of its 19 deals occurring in Europe and two more in Canada.
That activity within the U.S. has been very evenly split by region. ABRY Partners is most active in the Mid-Atlantic, completing 15 deals in the area in both 2015 and 2014, but the South, Southeast and West Coast have each also been the site of double-digit deal counts.
ABRY Partners has three separate families of funds: private equity, senior equity and senior debt. We’ll focus on PE vehicles, which the firm deploys for its buyout activity.
Here’s a look at the pertinent details of ABRY’s closed PE funds:
*Note: We excluded ABRY’s 2014 vintage as we feel the fund is too early in its lifecycle for the metrics to fairly reflect the vehicle’s performance.
As you can see, and as mentioned above, more and more LP capital continues to flow to the firm with each new raise. Excluding the firm’s largely uninvested Fund VIII, these vehicles show very steady IRR figures; the differing time frames makes it difficult to read too much into TVPI. Every fund on the list also ranks in the upper half of its benchmark, with Funds IV and V both resting comfortably in the upper quartile.
In the past three years, ABRY Partners has completed a total of 151 buyouts. The vast majority of those—136 of them, 90% of all buyout activity—were add-ons to existing portfolio companies.
The largest of those deals was the $1.9 billion acquisition last August of telecommunications and IT services provider Fibertech as an add-on to Lightower, a company in which ABRY is a stakeholder alongside other PE firms such as HarbourVest Partners. The firm also sponsored a $500 million purchase of Ex Libris Group last December by portfolio company ProQuest, an information and data provider, and a $142 million add-on of RACO Wireless to KORE Wireless.
Of late, ABRY Partners has been particularly busy buying up insurance businesses for its various platforms, including deals for insurance broker Dowling & O’Neil and medical malpractice specialist PriMed Consulting as add-ons to The Hilb Group, and the purchase of Most Insurance, Fair Price Insurance and Duane Sammons Insurance Center by portfolio company Confie Seguros.
In the month of April, the firm has already consummated three more insurance deals, acquiring P.A. Post Agency and Axiom Insurance Agency as add-ons and SambaSafety through an LBO.
Despite the add-on onslaught, the firm has still been active in adding new companies to its own portfolio. That includes Accela, a provider of civic engagement software, for which ABRY participated in a $184 million growth round last March, and Sentry Data Systems, a healthcare tech business ABRY Partners acquired last May for a reported $200 million.
So far, ABRY Partners has made one exit in 2016, selling flight operations software company Navtech to Airbus for an undisclosed sum; ABRY had backed the company since 2005. The firm’s other significant exits of the past few years tend to focus in the areas of communications, media and software. That includes the $1.89 billion sale of co-location systems provider Telx Group to Digital Realty Trust (NYSE: DLR) last October; a $175 million exit from communication services provider One Source Networks to GTT Communications (NYSE: GTT) in the same month; and the sale of a majority stake in digital media business VerticalScope to Torstar for a reported $200 million last July.
During 2014, ABRY completed two more major exits. The firm sold workforce management provider PRO Unlimited for $300 million to Investcorp that November, exiting an investment from 2010. And ABRY also divested its stake in York Risk Services Group, selling the insurance claims provider to Canadian firm Onex for a reported $1.3 billion.
Among the other investments the firm has exited in the past few years for undisclosed amounts are data-center developer e-Shelter, business affairs manager Talent Partners and managed security business Xand (now known as TierPoint).
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