By Milana Vinn
NEW YORK (Reuters) - Private equity firm KKR & Co (NYSE:KKR) Inc has agreed to buy a significant stake in FGS Global in a deal that values the financial communications group at about $1.4 billion.
As part of the deal, KKR will buy up a 30% stake from senior employees at FGS Global and its largest investors, including London-based advertising giant WPP Plc (LON:WPP). WPP, which was founded by Martin Sorrell, will retain a majority stake in FGS Global.
Existing investor Golden Gate Capital is selling its entire stake to KKR, which is investing in FGS Global through its $8-billion European Fund VI.
“What we’ve been doing is to really back exceptional management teams in growth industries where we can bring more than just capital to the table. We believe the strategic communications space is absolutely at an interesting and pivotal point,” said Philipp Freise, co-head of European private equity at KKR.
FGS Global was formed out of a 2021 merger between U.S.-based Sard Verbinnen & Co and Finsbury Glover Hering, in a deal that valued the combined firm at about $917 million. Earlier in 2021, Finsbury Glover Hering was formed out of a tie-up between Finsbury, the Glover Park Group and Hering Schuppener.
FGS Global currently employs more than 1,200 people across 27 offices globally. It generated revenue of about $435 million in 2022, according to people familiar with the matter.
The group is one of the dominant and most influential players in the financial public relations industry, and counts the likes of SoftBank Group Corp, Apple Inc (NASDAQ:AAPL), the National Football League, and Visa Inc (NYSE:V) among its customers.
FGS Global's top ranks include co-Chairmen Roland Rudd, Carter Eskew and George Sard, and Chief Executive Alexander Geiser. The group currently has four co-CEOs of North America - Andrew Cole, Paul Kranhold, Winnie Lerner and Joel Johnson.
In an interview, Lerner said the deal would allow the company to issue equity to employees across the company.
"We want to establish this firm for the future – we want our junior colleagues to see this as a place where they want to grow and flourish," said Lerner.
The fast-growing financial communications industry has witnessed a flurry of dealmaking over the past few years, as investors have bet big on companies that are in the business of advising large corporates, boardrooms, and executives on financial deals, crisis management and other critical matters.
Teneo, which is backed by CVC Capital Partners, bought London-based Tulchan in January. In 2021, BDT Capital picked up a sizable stake in Brunswick (NYSE:BC) Group.