KKR already owns a stake of about 30 per cent in FGS Global, as of July 2023, with WPP holding 55 per cent and the rest owned by partners and staff.
As a result of the new transaction, FGS’s over 500 employee will have equity interest of c.26 per cent of the company. WPP said the deal would generate c.£604m for the holding company, after tax, with the proceeds used to reduce leverage.
A statement released this morning said: “Since KKR’s initial minority investment in July 2023, FGS has benefitted from KKR’s access to global resources, network and expertise in building best-in-class global enterprises.
“Both KKR and FGS are focused on enhancing the company’s growth and extending its leading position as a global advisor to boards and C-suites in business-critical situations. FGS will continue to be a partner-led firm, managed by the existing leadership team. KKR is committed to supporting FGS’s ambitious growth plans while ensuring FGS continues to uphold the highest standards of independence, client confidentiality and trust.”
Philipp Freise, partner and co-head of European Private Equity at KKR, said: “Our investment in FGS reflects our strong commitment to strategic partnerships, where we provide long-term capital and global resources to entrepreneurial teams and world-class businesses. We strongly believe in FGS’s strategy and leadership and have been pleased with our partnership since our minority investment in July 2023. In today’s increasingly complex stakeholder ecosystems, the value of FGS’s insight, advice and execution is increasingly essential for organizations to navigate uncertainty and achieve their goals. We look forward to continuing our collaboration and helping FGS realise their vision as a global category leader.”
Alex Geiser, global CEO of FGS, said: “Our enhanced strategic partnership with KKR is a clear signal of their confidence in our ability to scale and enhance our position as the preeminent consultancy helping leaders successfully navigate the stakeholder economy. With KKR’s reinforced support, we’re poised to accelerate our growth, attract and empower new talent, and further our commitment to value creation that benefits all our stakeholders, especially our clients and employees. Together, we are ideally positioned to lead growth and innovation of the industry as FGS moves into its next phase as a standalone firm.”
Roland Rudd, global co-chair of FGS, said: “I would like to thank WPP for their longstanding partnership. I am particularly grateful to WPP chair Roberto Quarta and WPP CEO Mark Read for their support as we have grown FGS Global into what it is today. I am delighted that KKR is now backing FGS to become the undisputed global leader in our sector.”
The transaction is expected to close by the end of the year, subject to regulatory approvals and other customary closing conditions, according to today’s statement.
The FT reported in June that WPP had rejected a bid by KKR to gain a majority stake in FGS. The FT wrote that the latest offer valued FGS at a higher price than its $1.425bn valuation at the time KKR invested in April 2023, but the bid was dismissed for being too low. Nonetheless, the private equity firm could reportedly return with a higher offer, the newspaper reported.
KKR’s initial investment in FGS Global saw Golden Gate Capital, the private investment firm that had been a shareholder in FGS since 2016, exit its investment through the sale of its stake to the private equity company.
PRWeek wrote at the time that the KKR deal was likely to push back a planned IPO for FGS until at least three years from 2023 – the initial plan had been to float on the stock market by 2024 at the latest.
FGS Global formed in its current structure in December 2021, after the merger of Finsbury Glover Hering (FGH) and Sard Verbinnen. FGH itself launched as a combined entity at the start of 2021 after the merger of WPP stablemates Finsbury, The Glover Park Group and Hering Schuppener.
The agency generated revenue of $455.4m in 2023, with 1,400 employees globally, according to PRWeek’s Agency Business Report.
PRWeek will be adding more to this breaking story.
This article originally appeared on PRWeek.