Private equity firm KKR has acquired a 29 per cent stake in FGS Global, marking the latest investment by a buyout group into the niche sector of communications focused on providing strategic and crisis advice to corporations and executives.
The minority investment values the WPP-backed financial communications company at about $1.43bn, confirming an earlier Financial Times report.
Following the investment, WPP will remain the majority shareholder in FGS, the advertising group announced, allowing it to continue consolidating the group’s accounts. FGS shareholder Golden Gate Capital will sell the entirety of its 6-7 per cent stake in the deal.
“Stakeholder engagement is a boardroom issue and we are today establishing a powerful strategic partnership between WPP and KKR to support FGS Global,” said KKR’s co-head of European private equity Philipp Freise.
FGS has been formed over the past few years through the merger of three communications and lobbying companies controlled by UK-listed WPP. Those groups — London-based Finsbury, Frankfurt-based Hering Schuppener and Washington-based Glover Park Group — agreed to merge in 2020.
The trio bought US-based Sard Verbinnen a year later to take on their biggest competitors. Rivals to FGS include US-listed FTI Consulting and privately held Teneo, which is controlled by private equity company CVC, and Brunswick Group, which has also received outside investment.
FGS is led by its chair Roland Rudd, a Briton who founded Finsbury in 1994, and chief executive Alexander Geiser, a German-Canadian who joined Hering Schuppener in 1998. It employs 1,300 people and has about 200 partners.
The firm’s senior leadership and partners previously owned about 36 per cent of the company, and were expected to sell almost half of their collective stake. The deal values FGS at about 15 times this year’s earnings before interest, taxes, depreciation and amortisation.
Under the terms of the roll-up of groups, FGS was aiming for an initial public offering by 2024. The investment from KKR is likely to postpone that target.
Globally, FGS topped its competitors as the lead public relations business last year for mergers and acquisitions based on deal volume and value, advising on 322 deals with a total value of more than $657bn in 2022, according to Mergermarket.
Some of FGS’s biggest clients include EY, UnitedHealth, Bayer and SoftBank. KKR has been a longstanding client of FGS.
This deal comes amid a recent bout of consolidation in the financial communications industry.
CVC-owned Teneo acquired its smaller UK rival Tulchan for more than £65mn earlier this year. US public affairs company APCO Worldwide last month acquired London-based financial communications company Camarco in a deal worth about £20mn.
US-listed KKR said last week that it had closed its largest European fund and raised $8bn. That new vehicle will provide financing for this deal.
Shares of WPP have traded down about 6 per cent over the past year, underperforming peers even as the group defies fears of an advertising slowdown.
The transaction is expected to close before the end of the third quarter of this year.
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