Forbes - Tiger Woods meets private equity

Kevin Dowd and Becca Szkutak

Staff Writers

David Shapiro and Michael Psaros are about substance, not style. They’re the cofounders of KPS Capital Partners, a Manhattan-based private equity firm that’s spent the past 25 years turning around manufacturing and industrial companies. Its current portfolio includes Howden, which engineers fans and compressors; Speira, which churns out a million tons per year of rolled aluminum; and Briggs & Stratton, which makes lawnmower engines.

It’s been a successful strategy for Shapiro and Psaros. But it isn’t a flashy one. It isn’t a strategy that typically involves global sports superstars.

The past several years, though, brought an exception.

Private equity played a small role in Tiger Woods’ unexpected Masters triumph in 2019. Getty Images

After KPS bought the struggling TaylorMade golf equipment brand from Adidas for $380 million in 2017, it quickly began the process of turning the page on years of red ink. Golf clubs aren’t so different from some other heavy industries, KPS learned. Many of the strategies that streamlined the process of making and selling rolled aluminum and engines also applied to making drivers and sand wedges.

The firm also helped change the way TaylorMade approached professional golf, shifting its focus toward some of the sport’s biggest names. When Tiger Woods won a stunning victory at the 2019 Masters, he did so with a bag full of TaylorMade clubs.

Last year, KPS sold TaylorMade to South Korean firm Centroid Investment Partners for $1.7 billion. And it logged an eyebrow-raising return in the process. I’ve spent some time over the past few weeks diving into the details of how KPS and Woods helped fuel a private equity hole-in-one at TaylorMade. —K.D.

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A statement-making fund from KKR

In November, President Joe Biden signed a $1.2 trillion bill that authorized hundreds of billions in new investments to revitalize America’s aging infrastructure. Now, one of the world’s biggest private equity firms is planning its own spending spree in the space.

Just last month, KKR’s infrastructure arm agreed to buy beverage bottler Refresco for nearly $8 billion. AFP via Getty Images

KKR closed its biggest infrastructure fund ever Monday, bringing in $17 billion in commitments, including $1 billion of its own cash. That’s a huge leap from the firm’s previous global infrastructure fund, which closed on $7.4 billion in 2018. In a statement, KKR executive Alisa Amarosa Wood attributed the new vehicle’s bulk to “robust opportunities that we see in this asset class,” which surely include the planned flood of government spending in the U.S.

Not only is this a new record for KKR—it’s also one of the largest pools of capital ever raised by anyone in the sector. Global Infrastructure Partners, Brookfield Asset Management and EQT are the only firms to log larger infrastructure funds. EQT closed its latest effort in November with €15.7 billion ($17.2 billion) in commitments. —K.D.

$50 million for silk protein

I know I’m not alone in having a package of greens rotting in my fridge almost all the time—always bought with good intentions, always spoiled too soon.

But while a slight annoyance for me, it plays into the larger issue of food waste in America: About a third of the American food supply is wasted each year—and roughly 40% of that waste is generated in manufacturing and processing. If food could stay fresh longer, it could help reduce some of this waste.

Mori is trying to crack this code. The Boston-based startup has created a system that uses silk protein to coat food to extend its shelf life in transit and in stores by keeping air out, moisture in and reducing the ability for bacteria to grow. The startup announced a $50 million Series B round on Friday that was led by Prelude Ventures with participation from The Drawdown Fund, Thia Ventures and The Engine, among others.

Misfits Market and Imperfect Foods, meanwhile, are appealing to consumers’ interest in reducing food waste. Both companies offer subscriptions to buy “ugly” or misprinted products that otherwise might not end up on the misted produce shelves in grocery stores. The companies have raised $526 million and $229 million respectively. —B.S.

London is calling for Coatue

The European venture capital market has been growing slowly but surely for the past decade. In 2021, though, that steady growth curve got a lot steeper. VCs invested €102.9 billion ($113 billion) in Europe last year, according to PitchBook, more than double the previous all-time yearly high by more than 100%.

So it should come as no surprise to see a major Wall Street investor taking steps to build out its venture presence on the continent. Coatue, which has pushed aggressively into the business of staking startups in recent years, has hired longtime VC Sarah Cannon as a general partner—and the first Coatue investor based at the firm’s new office in London.

Cannon was most recently at Index Ventures, where she invested in software unicorns like Slack and Notion. Our colleague Alex Konrad took a closer look at what her addition might mean for Coatue. —K.D.

They Said It

“The supply chain is destroying a lot of these DTC brands. They’re so heavily dependent on China for their products, and shipping costs of bulk containers have gone up astronomically."

—Eric Bandholz, CEO of beard-care startup Beardbrand, speaking to CNBC about a reckoning that’s underway in the direct-to-consumer space

Just The Facts

— Mining powerhouse Rio Tinto offered to buy the 49% of Turquoise Hill Resources that it doesn’t already own for about $2.7 billion, an effort to gain greater control over a major copper mine Turquoise Hill controls in Mongolia. The price of copper is up about 9% so far this year, part of broad volatility in commodity markets driven by the war in Ukraine.

— Minneapolis-based Omnia Fishing raised a $4 million seed round led by Dundee Venture Capital with participation from Joe Montana’s Liquid 2 Ventures, Great North Ventures and Founder Collective, among others. The fishing-gear retail startup relies on user-created fishing reports to help customers shop by season and lake.

— Here’s a sentence that would have been completely incomprehensible three years ago: Yuga Labs, the company behind the Bored Ape Yacht Club, has purchased CryptoPunks and Meebits from Larva Labs, bringing together three of the most valuable NFT collections under one umbrella. Multiple outlets reported last month that Yuga was in talks to raise funding from Andreessen Horowitz, perhaps at a valuation as high as $5 billion.

— One of the cofounders of Brazil’s first unicorn—ride-hail company 99—is back at the helm of a new company. Ariel Lambrecht, alongside Danilo Mansano, has launched Mara, a Latin America-based online grocery delivery startup that gives its users access to wholesale prices. The new initiative just raised $6 million in a seed round led by Canary and Caffeinated Capital.

— Textbook publisher Pearson said late last week it has rejected two recent takeover offers from Apollo Global Management, including a latest bid worth about £6.5 billion ($8.5 billion). The company didn’t think the offers reflected a fair valuation. Three weeks ago, Pearson competitor Houghton Mifflin Harcourt agreed to sell itself to Veritas Capital in a $2.8 billion buyout.

— Tristan Walker is raising $15 million for a new VC fund called Heirloom Fund, according to documents filed with the SEC. Walker is the former founder of Walker & Co., a line of health and beauty products designed for people of color. The company raised $33.3 million in venture capital before being acquired by Procter & Gamble in 2018 for an undisclosed amount.

— A cornerstone of China’s ecommerce economy is building out its services through M&A, as JD Logistics agreed to buy Deppon Logistics for 9 billion yuan ($1.4 billion). JD Logistics went public in Hong Kong last year, spinning out from JD.com. Our Forbes Asia colleague Yessar Rosendar has more on the takeover.

— Carl Icahn is upping the ante in his pursuit of Southwest Gas, entering a new takeover offer on Monday worth $82.50 per share, or nearly $5 billion. That’s up from a bid of $75 per share Icahn submitted in October. Icahn currently owns a roughly 5% stake in Southwest and has proposed wholesale changes at the Las Vegas-based utility.

Charted

The Latin American startup market is still red hot, especially Brazil’s, per data from the Latin America Venture Capital Association. Companies in the region raised $29 billion in 2021, nearly double 2020’s total—and ones based in Brazil accounted for nearly half that, a larger share than they commanded in 2020. Brazilian startups secured $13.9 billion, more than double their funding in 2020—for 47% of the region’s funding in 2021 compared with 38% in 2020.

Other countries in the region are seeing strong growth, too. Mexico doubled its 2020 funding to $5.5 billion in 2021. Argentina’s market raised only $1.29 billion in 2021, but that tripled its 2020 haul. Both Colombia and Chile saw increases of 15% or more.

What We're Reading

If last year’s funding numbers are any indication, Denver’s venture scene was one beneficiary of the pandemic-induced flight from Silicon Valley. (The Wall Street Journal)

Private equity firms are ramping up their activity in the U.S. middle market. But these smaller takeovers can come with their own set of cultural challenges. (Harvard Business Review)

Neighborhood watch startup Citizen says it plans to launch in Ukraine with on-the-ground footage from CBS reporters. CBS says discussions were held but no such deal was made. (Vice)

The rest of the world’s swift response to Russia’s invasion of Ukraine could signal the start of a new era when it comes to waging monetary war. (n+1)

Ty Haney is back as a startup founder and ready to move on from her time at the helm of Outdoor Voices. Her new venture: a B2B NFT startup. (The New York Times)

A decade ago, Silicon Valley was still in the era when founders were gods. In modern Hollywood, it’s all about the founders who were frauds. (Recode)

What happens when three former cofounders—of a vending machine startup, a checkout tech company and a psychedelic-based drug developer, respectively—launch a pharma startup apparently involving nutraceuticals, painkillers and crypto? (The Information)

A startup called Cerebral offers the latest case study in the inherent tensions that arise when a move-fast-and-break-things approach intersects with healthcare. (Bloomberg)

What To Watch For

Rihanna might be coming to Wall Street. Her lingerie brand Savage X Fenty is working with Goldman Sachs and Morgan Stanley on a potential $3 billion IPO that could occur before the end of 2022, per a Bloomberg report. Savage X Fenty has grown rapidly since its founding less than four years ago, aided by a $115 million round of Series B funding last year led by frequent retail investor L Catterton.

Kevin Dowd

Staff Writer

I am a staff writer at Forbes. I previously wrote for PitchBook, where I created The Weekend Pitch, a weekly newsletter about the private markets. Before that, I covered high school sports in the Pacific Northwest, and I graduated from the University of Washington with a degree in journalism and creative writing. I live in Seattle, where I read a lot of books and play a lot of golf.

Follow me on Twitter.

Becca Szkutak

Staff Writer

I'm a New York-based reporter covering venture capital, startups and investors. I was previously a reporter at the Venture Capital Journal and Private Debt Investor. I graduated from Emerson College in 2017 with a degree in journalism.

Follow me on Twitter at @rebecca_szkutak or send me an email at rszkutak@forbes.com.

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Forbes - Tiger Woods meets private equity

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