In one of the most striking private equity deals of the year so far, Providence Equity Partners has agreed to buy GlobalTranz (GTZ), a top 10 third-party logistics provider (3PL), back from The Jordan Company. In June 2018, Providence sold GlobalTranz to Jordan for approximately $400 million.
Providence’s initial investment in GlobalTranz came out of its Strategic Growth Fund, which led a $40 million Series C, along with Susquehanna, in 2014. After Providence raised billions of dollars in additional capital for its eighth equity fund – the Wall Street Journal reported that Fund VIII had raised $4.43 billion by the end of 2018 – it was ready to welcome GlobalTranz back to its portfolio.
An investment banker who was not involved with the deal told FreightWaves that GlobalTranz “blew its plan out of the water” and that The Jordan Company was in a position to realize an approximately 100 percent return on its investment in less than a year. The financial terms of the acquisition and management’s capital structure were not disclosed.
“The team at GlobalTranz has built a technology-driven, market-leading logistics platform that has delivered strong value and growth. The company is poised for continued success and we are excited to be part of the next stage of the company’s evolution,” said David Phillips, Managing Director at Providence Equity, in a statement. “GlobalTranz is a very strong fit with our model, and we expect to leverage our relationships and resources to help management continue to grow the business.”
Renee Krug, chief executive officer at GlobalTranz, spoke to FreightWaves and confirmed that GlobalTranz had significantly outperformed its growth plan and more than doubled EBITDA under The Jordan Company’s ownership. Krug has served as GlobalTranz’s CEO since January; before that, Krug was GlobalTranz’s chief financial officer beginning in 2014 and helped lead the 3PL’s aggressive buying spree, including nine acquisitions since January 2017.
“We’re a known commodity to Providence – we have a great track record of outperformance with them,” Krug said. “We delivered a phenomenal return for Jordan. They’ve been a wonderful partner helping fuel our growth, and we couldn’t say enough good things about them.”
“Our strategy is delivering strong organic growth combined with strategic acquisitions, and we will continue to hit the accelerator,” Krug said.
Krug also addressed GTZ’s acquisition of Circle 8 Logistics, a Chicago-based freight brokerage that did approximately $100 million in revenue in 2017. That deal that was announced on Tuesday morning, April 2.
“Circle 8 was a great acquisition,” Krug said. “It’ll expand our Chicago footprint. Circle 8 has an excellent reputation in the industry, a relentless focus on customers and strong partnerships with carriers, and a great set of large enterprise customers.” Circle 8 was keen to implement the technology GlobalTranz could offer its operation, particularly its best-in-class less-than-truckload platform, Krug said.
Consolidation in the 3PL and freight brokerage industry will continue due to the larger players’ technological advantages, the inherent network effects of scale, and the challenges companies face in maintaining steep growth trajectories above a certain size.
“You will continue to see those rollups occurring,” Krug said. “Part of it is because the bigger companies like GlobalTranz have a tremendous investment in technology. When you have that capability it facilitates so much, from the quick movement of freight to customers’ control tower and knowing where their freight is at any time, and great business intelligence tools and analytics. We continue to grow and manage transportation, and that’s great for our customers as well.”
Krug said that she expects GlobalTranz to close between three and five opportunistic acquisitions over the next year, but that those numbers could change depending on the size of the deals.
FreightWaves asked Krug to reflect on what her first three months as chief executive officer meant to her personally and professionally.
“Fortunately at GlobalTranz, we had a strong leadership team, so I was involved in a lot of business already in terms of working closely with our agents, private equity and our sales team,” Krug said. “It’s just a new level of responsibility, making sure we’re executing against our overall strategy. GlobalTranz has been a wonderful company to work for. Over 10 years of strong growth is part of the culture of who we are – everyone’s out there accelerating and doing their best in every single function.”
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