The Blackstone Group and Singapore's sovereign wealth fund GIC will invest $750 million of equity to recapitalise Kronos, a US-based workforce management business, according to a Kronos statement.
Kronos provides cloud-based services that to help control labour costs, minimise compliance risk and improve workforce productivity. Blackstone and GIC will invest in the business alongside existing investors Hellman & Friedman and JMI Equity, which took Kronos private in 2007 for about $1.8 billion.
The investment by Blackstone and GIC values Kronos at $4.5 billion, according to the statement.
Hellman & Friedman will retain its majority ownership of Kronos following completion of the deal, which is expected to close in the first half of 2014. Morgan Stanley and Jefferies served as financial advisors to Kronos.
Under Hellman and JMI’s ownership, Kronos has increased revenues by 45 percent and grown its earnings before interest, tax, depreciation and amortisation by 114 percent, according to a statement. Since making their original investment, the two firms have drawn dividends of about $1.5 billion from Kronos.
“GIC has been following the Kronos story since Hellman & Friedman’s initial investment,” Eric Wilmes, head of GIC Special Investments’ North America direct investments group said in a statement. “The company’s track record speaks for itself.”
Blackstone had an active 2013. During the fourth quarter of 2013, the firm invested or committed $3.4 billion of private equity capital and for the full year, $5 billion.
“The US economy is definitely picking up strength,” Blackstone president Tony James said during an earnings call last month.
“It has wanted to grow for a while, but at this point it doesn’t have the headwinds that we had last year.”
James said the firm’s overall outlook for 2014 was much improved from 12 months ago, when events such as sequestration (automatic federal budget cuts) and the threat of a government shutdown brought economic uncertainty and a “fiscal drag” on the economy.