KKR Invests in Koerber’s $1.7 Billion Supply Chain Software Unit
KKR Takes Stake in German Supply Chain Software Maker Koerber
(Bloomberg) -- KKR & Co. has invested in warehouse-management software maker Koerber AG, at a time when increasing demand pressures are forcing a reexamination of the infrastructure underpinning global supply chains.
The private equity firm will take a significant minority stake in Hamburg-based Koerber’s supply chain software business, according to a statement Tuesday. Financial terms of the transaction weren’t disclosed. The deal values the unit at more than 1.5 billion euros ($1.7 billion), people familiar with the matter said separately.
Koerber serves over 4,200 customers across a range of industries in more than 70 countries. Its supply chain business offers services for managing goods at warehouses, ranging from hands-free and robotic technology for sorting to software for transport and delivery.
The vulnerabilities of global supply chains have been brought into sharp relief this year, amid shipping backlogs and shortages of everything from fancy cheeses to semiconductors. While there are signs of these pressures easing, longer-term overhauls of legacy infrastructure remains a focus for logistics companies. Increasing demand by customers for transparency within supply chains is also driving a rethinking of operations.
Covid as Accelerator
“Same-day delivery, and all the things we are now used to, have been accelerated by Covid,” said Jean-Pierre Saad, KKR’s head of technology for private equity in Europe.
“But even before Covid there has been a lot of complexity building into the supply chain market because of shocks like Brexit or the demand for more transparency, for example, in sustainable sourcing,” Saad said in an interview. The market for supply chain software is now $16 billion to $20 billion and is growing by double digits, he said.
KKR is investing in Koerber from its European Partners Fund V. The firm has been one of the most acquisitive buyout houses globally during the coronavirus pandemic, according to data compiled by Bloomberg. Its deal with Koerber adds to a string of recent private equity investments in Germany.
C-Level Concern
“Supply chain resilience is a big topic -- so across many of our portfolio companies today at KKR a board level discussion is cyber security and the second one is supply chain resilience,” Saad said. “This whole space has been elevated to C-level discussions which means companies are ready to spend more to make sure their supply chain is seamless and as automated as possible.”
The market for warehouse software is fragmented and many companies use, for instance, the functionalities of Oracle and SAP software systems. KKR is planning to help Koerber grow with bolt-on acquisitions, which could, for example, add functionalities to warehouse software.
“Right now the environment is to look for an accelerated growth case,” said Koerber Chief Executive Officer Stephan Seifert.
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