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MiddleGround expected to exit Arrow Tru-Line; BlackRock to buy ElmTree, noting structural shifts in real estate; Advent and other PE firms back sauces

Good morning, Hubsters. MK Flynn here in New York with the US edition of the Wire.

We’ve got a deal-packed day for you!

First up, we’ve got a scoop on an expected MiddleGround Capital exit.

There’s also news of BlackRock buying PE firm ElmTree Funds.

And we take a close look at why PE firms like Advent, Platinum and Graham are betting on flavor-filled sauces and condiments.

Let’s start with the exclusive.

Exit expected

MiddleGround Capital is expected to sell Arrow Tru-Line, a manufacturer and supplier of overhead garage door hardware components, to Blackstone-backed Chamberlain, sources familiar with the deal told PE Hub’s Obey Martin Manayiti.

MiddleGround declined to comment. Blackstone did not respond to requests for comment.

To read all about the deal, including what sources say the returns are, upgrade to the premium version of the Wire.

PE Hub has seen a slew of PE-backed deals in the home and commercial door business. We spotlighted five deals last year.

The sector has previously racked up huge profits for private equity investors, including KKR’s exit from CHI Overhead Doors, which scored PE Hub’s and Buyouts’ Deal of the Year in 2023.

Structural shifts

BlackRock announced this morning that it has agreed to acquire ElmTree Funds, a net-lease real estate investment firm founded in 2011 that now has $7.3 billion in AUM.

To learn more about the deal, including how “structural shifts in the real estate sector are creating new opportunities for private capital,” upgrade to the premium version of the Wire.

Flavor innovation

Sauce and condiment businesses make up just a dab of the food and beverage sector, but the subsector’s flavor kick is drawing private equity interest, reports PE Hub’s Rafael Canton.

In February, Advent International acquired Sauer Brands from Falfurrias Capital Partners. A Richmond, Virginia-based provider of condiments and seasonings brands, Sauer Brands’ roster includes Duke’s Mayo, Mateo’s Gourmet Salsa and Kernel Season’s.

In October, Graham Partners acquired Tulkoff Food Products. Based in Baltimore, Tulkoff is a maker of custom sauces, dips and dressings. Over the last year, condiments deals have also been completed by Platinum Equity, Forward Consumer Partners, L2 Capital and SKKY Partners.

To learn more about the subsector, Rafael spoke with Tricia Glynn, a managing partner at Advent International; Andrew Snyder, a managing principal at Graham Partners; and Stephen Scharafin, director and senior member of Brown Gibbons Lang & Company’s consumer team focusing on food and beverage.

Subscribers to the premium version of the Wire will gain access to the interviews.

On that tasty note, I’ll sign off. As always, I’d love to hear from you at mk.flynn@pei.group.

Tomorrow, Craig McGlashan will bring you the Europe edition of the Wire, and Obey Martin Manayiti will bring you the US edition.

Cheers,

MK

Read the full Wire commentary on PE Hub ...

Also of note (may require subscriptions)

Global Infrastructure Partners, a part of BlackRock, has closed its fifth flagship fund on $25.2 billion, Infrastructure Investor can reveal, in what is set be the largest fund close of the year.

Private equity firms are eyeing the US’s $12trn 401(k) market as their next battleground. Navigating the structural and legal hurdles won’t be an easy task. (Private Equity International)

Phoenix Group, the UK’s biggest life and pensions provider, is set to commit up to £1 billion ($1.37 billion; €1.16 billion) towards private equity and venture capital over the next three to five years, according to its head of private markets. (Private Equity International)

Do yourself a favor and give a look at PERE's 20th anniversary report, looking back at the people, events and trends that mattered most since it published its first-decade edition.

As the universe of buyout-backed companies grows, exits have remained stagnant and private equity portfolio companies are being held longer. Now, North American funds are running out of dry powder, creating a potentially significant opportunity for secondaries, according to a paper from W Capital Partners. (Secondaries Investor)

Fund commitments made through the European Investment Fund’s green tech mandate carry a requirement for GPs to link at least 30 percent of their carried interest to the achievement of impact goals. Céline Lévy, investment manager in the EIF’s green tech team, told Agri Investor that the requirement has been in place since 2020 and was introduced to prevent “mission drift” during the life of a fund.

Deals

They said it

“Condiments, sauces, and seasonings are a big, growth-filled sector in the grocery store overall. It’s a healthy sector, for the most part, driven by consumer demand for flavor innovation and differentiated taste profiles that pack a big punch. And that can be especially important in more volatile economic times when consumers spend more time eating at home.”

— Tricia Glynn, managing partner, Advent International, on the subsector’s appeal to private equity

Today's letter was prepared by MK Flynn

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