KPS sees ‘unbelievable’ deal flow in Germany

The firm has found a number of investment opportunities in Germany following the opening of its Frankfurt office last year.

KPS Capital Partners is deploying capital where few US firms are finding investment opportunities: Germany.  
Last week, the firm acquired the North American division of German iron castings company ThyssenKrupp Budd, which services the automotive, agriculture, construction, hydraulics and commercial vehicle markets. KPS’ purchase of ThyssenKrupp’s US business marks the firm’s third transaction with a German-based company since the beginning of 2012. In April, KPS invested in a division of bus and motor coach company Daimler, and in January, the firm acquired German automotive company The Bosch Group’s brakes business.
“We’re off to a really spectacular start in Germany,” KPS partner Michael Psaros told Private Equity International. “The deal flow out of Germany is unbelievable [and] we expect to continue to invest opportunistically and selectively [there].”
The string of investments comes roughly 18 months after KPS opened a Frankfurt office, the firm’s only other office aside from its New York headquarters. 
“We are going to build out our Frankfurt effort between now and the end of the year,” Psaros said, adding that the firm has faced limited competition for deals in Europe since opening in the region. 
”There are very few turnaround funds in Europe to begin with that are our size,” he said.

KPS is currently investing from its third fund, a $2 billion vehicle. The firm closed Fund III in 2007 on $1.2 billion, but reopened fundraising for existing investors, eventually closing on an additional $800 million.

Psaros said KPS would likely not begin fundraising for its fourth fund until the spring of 2013.

Roughly 75 percent of KPS’ investments during its 20 year history have involved the purchase of non-core manufacturing or industrial businesses. Last October, the firm pursued a strategy of capitalising on high-growth markets in China and India by acquiring North Carolina-headquartered manufacturing company American & Efird.