PSP Hits The Red Carpet?

Martha Porado of Benefits Canada reports, PSP Investments seeks direct partnership deal with stake in global talent agency:

The Public Sector Pension Investment Board, alongside global alternative investment manager Investcorp, is taking a strategic minority stake in United Talent Agency.

The capital from the two investors is aiming to boost the global talent and entertainment company’s continuing growth, expanding its core business of talent representation. Indeed, UTA recently amped up acquisitions in areas including live speaking, electronic music, e-sports and gaming.

“The investment in UTA is really an opportunity to back a trend in the media industry,” says Simon Marc, managing director and global head of private equity at PSP Investments, in a press release. “The entertainment industry is experiencing a lot of change, a lot of transformation. There is new technology, new players and so on, with Netflix and Amazon. A lot of that is changing the shape of the industry, but it is also driving a lot of growth and demand for content.

“The need for content is becoming greater and greater, and the value of content has been growing exponentially over the last number of years,” he says. In such an environment, the business of scoping out new talent is growing along with the entertainment industry’s expansion, adds Marc. “This is an industry that is consolidating and the need for scale is growing.”

UTA, in particular, recognizes the need to diversify across areas of content, not limiting itself to simply working in television or live music, for example, he says.

PSP’s investment is part of a larger trend among institutional investors in seeking direct partnership deals with innovative enterprises, according to Marc. Part of his team’s current focus is pinpointing growth opportunities and allocating capital as a direct, but limited, partner, rather than purchasing private companies outright.

While the financial terms of the deal are undisclosed, UTA will maintain majority ownership, which was a key point of attraction for PSP, says Marc. “Finding a situation where it’s not people looking to sell the business, but it is really a group of partners looking for capital to grow their business.”

In her article, UTA Sells Minority Stake to Investcorp and PSP Investments, Cynthia Littleton of Variety does provide some financial details:

UTA has sold minority stakes in the agency to private equity outfits PSP Investments and Investcorp in the latest effort to accelerate the agency’s growth.

The goal is to provide a capital infusion to allow for expansion “in a time of change and innovation in content creation and distribution,” the agency said.

UTA’s sale follows the entry of private equity giants TPG and Silver Lake as majority owners of CAA and Endeavor, respectively, during the past decade. The latest round of investment in UTA values the company at around $700 million-$800 million, according to industry sources. The two investors have together taken a stake believed to be just under 40% for a price tag of around $200 million.

“This is a transformative event for UTA,” UTA CEO Jeremy Zimmer said. “There has never been a greater moment of change and opportunity in our industry for artists, creators and companies like ours. We were deliberate about finding the right investment partners who recognize UTA as a business that puts clients first, exemplifies a collaborative and diverse culture, and is focused long-term on capitalizing on the unique opportunities that disruption and transformation provide. We found that in Investcorp and PSP Investments.”

Some of the fresh cash is set to be distributed to UTA employees at every level but most will be invested in growth ventures for the company. UTA, like its larger rivals CAA and Endeavor, has expanded into the content arena and other areas beyond the core talent representation business. On Monday, the Core Media production venture, in which UTA is an investor, announced a major shift with the acquisition of Intellectual Property Group and plans to rebrand as Industrial Media.

UTA has already been in expansion mode for a few years. The company has nearly doubled in size during the past five years to 900 employees through acquisitions and new ventures in digital content, branding and the UTA IQ data analytics unit. The push into content raises conflict of interest concerns for the core talent representation business. Nonetheless, the largest talent agencies are diversifying rapidly into content ownership and production.

In April 2015, UTA sold a minority stake in the agency to investor Jeffrey Ubben and acquired the music-focused Agency Group. In early 2014, UTA bought the TV news-centric agency N.S. Bienstock, which was rebranded as UTA News and Broadcast. Last year, it bought the speakers agency Greater Talent Network.

UTA emphasized that its core executive management team of Zimmer and co-presidents Jay Sures and David Kramer would remain in control of the company.

“We believe UTA’s client-centric business model has strategically positioned the company to capitalize on the ongoing convergence of talent, content, distribution, and marketing,” said David Tayeh, Investcorp’s head of private equity for North America. “Investcorp has been impressed with UTA’s market position, the long-term growth it has enjoyed, and recognizes that its future success will be driven by the continued excellence of its partners in providing superior services for its clients.”

Investcorp manages about $22 billion in assets with a focus on real estate, private equity, alternative investment solutions, and credit management, per the firm.

PSP Investments is one of Canada’s largest pension funds with $153 billion in net assets. Investcorp and PSP have worked together on deals in the past.

“The entertainment industry is experiencing tremendous evolution,” said Simon Marc, managing director and head of private equity for PSP Investments. “As demand for high-quality content is greater than ever, UTA is uniquely positioned to benefit from the transformation in the sector. We are excited to partner with Jeremy Zimmer and UTA’s world-class management team and look forward to backing UTA in the next phase of its growth.”

PSP put out a press release on the deal, UTA Announces Capital Investment from Investcorp and PSP Investments:

Leading global talent and entertainment company United Talent Agency (UTA) today announced that Investcorp and the Public Sector Pension Investment Board (PSP Investments) are now strategic investors in the company.

The minority stakes by the two global investment firms mark a major milestone for UTA as it has undergone substantial growth in recent years. This new influx of capital from Investcorp and PSP Investments will be used to accelerate this momentum, enhance UTA's services, and continue to invest in resources to support its clients and colleagues in a time of change and innovation in content creation and distribution.

With a continued focus on its expanding core business of talent representation, and its reputation as a leading champion of artists and creators, UTA has more than doubled in size over the past five years to over 900 employees who work with and advise many of the most influential artists across entertainment, media, technology and major corporate brands. Over the past year, UTA has made acquisitions in the live speaking, electronic music, and e-sports and gaming businesses and has taken an equity stake in Core, recently renamed Industrial Media, which this year successfully relaunched American Idol.

Investcorp and PSP Investments join existing investor Jeffrey Ubben as UTA's capital partners. Investcorp is a leading provider and manager of alternative investments, with more than $22 billion in assets under management and over 35 years' experience investing globally across a diverse range of industries, including retail and consumer products, business services, technology, real estate, industrials and more. PSP Investments is one of Canada's largest pension investment managers with assets under management of $119 billion USD as of March 31, 2018 invested across 75 industries and more than 100 countries.

UTA CEO Jeremy Zimmer and Co-Presidents David Kramer and Jay Sures led the process of choosing the new investors. Zimmer, who with UTA Chairman Jim Berkus and co-founder Peter Benedek, founded UTA 27 years ago, said: "This is a transformative event for UTA. There has never been a greater moment of change and opportunity in our industry for artists, creators and companies like ours. We were deliberate about finding the right investment partners who recognize UTA as a business that puts clients first, exemplifies a collaborative and diverse culture, and is focused long term on capitalizing on the unique opportunities that disruption and transformation provide. We found that in Investcorp and PSP Investments."

David Tayeh, Investcorp's Head of Private Equity, North America, stated: "We are thrilled to have the opportunity to support UTA's leading franchise and partner again with PSP Investments. We believe UTA's client-centric business model has strategically positioned the company to capitalize on the ongoing convergence of talent, content, distribution, and marketing. Investcorp has been impressed with UTA's market position, the long-term growth it has enjoyed, and recognizes that its future success will be driven by the continued excellence of its partners in providing superior services for its clients."

"The entertainment industry is experiencing tremendous evolution," said Simon Marc, Managing Director and Head of Private Equity, PSP Investments. "As demand for high-quality content is greater than ever, UTA is uniquely positioned to benefit from the transformation in the sector. We are excited to partner with Jeremy Zimmer and UTA's world-class management team and look forward to backing UTA in the next phase of its growth. We also welcome the opportunity to team up once again with Investcorp. Our investment in UTA is a great example of PSP's ability to partner with top-tier entrepreneurs and like-minded investors."

Since 2014, UTA has established market-leading positions in key areas, including the news and broadcast space (through its acquisition of N.S. Bienstock in 2014), music touring (through its acquisition of The Agency Group in 2015), live speaking (through the acquisition of Greater Talent Network in 2017), electronic music (through its acquisition this year of Circle Talent Agency) and e-sports and gaming (through its acquisitions this year of PressX and Everyday Influencers). It has also expanded its presence in its Los Angeles headquarters and operates offices in New York, Nashville, London and Miami.

Financial terms will not be disclosed, but UTA's partnership maintains majority ownership and control of the company. The existing executive leadership team of Zimmer, Kramer and Sures, as well as Chief Operating Officer Andrew Thau will remain unchanged. UTA was advised on the deal by Moelis & Company and Skadden, Arps, Slate, Meagher & Flom LLP. Investcorp and PSP Investments were advised by Credit Suisse, Gibson Dunn & Crutcher, and Sidley Austin LLP.

ABOUT UTA

Leading global talent and entertainment company United Talent Agency represents many of the most acclaimed figures across film, television, news, music, sports, theater, fine art, literature, video games, podcasts and other social and digital content. A passionate advocate for artists, creators and innovators, the company also is recognized in the areas of film finance and packaging, branding, licensing and endorsements. UTA is known for its dedicated digital media group helping clients—from A-list talent to Fortune 500 companies—capitalize on a rapidly changing entertainment, media and business landscape. The agency's worldwide presence includes its Los Angeles headquarters and offices in New York, London, Nashville, Miami and Malmö, Sweden. Information about UTA can also be found by following the company on social media on Instagram, Twitter, Facebook and LinkedIn.

ABOUT INVESTCORP

Investcorp is a leading global provider and manager of alternative investments, offering such investments to its high-net-worth private and institutional clients on a global basis. Led by a new vision, Investcorp has embarked on an ambitious, albeit prudent, growth strategy. The Firm continues to focus on generating investor and shareholder value through a disciplined investment approach in four lines of business: private equity, real estate, alternative investment solutions and creditmanagement.

As at December 31, 2017, the Investcorp Group had $22 billion in total AUM, including assets managed by third party managers and assets subject to a non-discretionary advisory mandate where Investcorp receives fees calculated on the basis of AUM.

Since its inception in 1982, Investcorp has made over 175 corporate investments in the U.S., Europe and the Middle East and North Africa region, including Turkey, across a range of sectors including retail and consumer products, technology, business services and industrials, and more than 500 commercial and residential real estate investments in the US and Europe, for in excess of $56 billion in transaction value.

Investcorp employs approximately 390 people across its seven offices, including New York, London, Singapore and the Middle East. For further information, including our most recent periodic financial statements, which details our assets under management, please refer to our website, Twitter, Instagram and LinkedIn.

ABOUT PSP INVESTMENTS

The Public Sector Pension Investment Board ("PSP Investments") is one of Canada's largest pension investment managers with C$153 billion of net assets as at March 31, 2018. It manages a diversified global portfolio composed of investments in public financial markets, private equity, real estate, infrastructure, natural resources and private debt. Established in 1999, PSP Investments manages net contributions to the pension funds of Canada's federal Public Service, the Canadian Armed Forces, the Royal Canadian Mounted Police and the Reserve Force. Headquartered in Ottawa, Canada, PSP Investments has its principal business office in Montréal and offices in New York and London, its European hub. For more information, visit investpsp.com or follow us on Twitter and LinkedIn

This is another great private equity deal for PSP which partnered with Investcorp for access to this deal.

PSP's head of Private Equity Simon Marc is right, the entertainment industry is experiencing tremendous evolution and all you need to do is pay attention to what's going on at Apple, Netflix, Disney, Amazon, and many other companies.

Content is king and competition is fierce. The entertainment industry is changing fast and it's definitely not the old one where a handful of stars dominated. Social media, reality television, ADHD stricken fans always looking for their next big show, movie to watch, song, or celebrity to follow on Instagram and Twitter.

In short, there are major transformations going on in entertainment and there are only a handful of talent management agencies dominating the landscape: UTA and its larger rivals CAA and Endeavor, all of which have expanded into the content arena and other areas beyond the core talent representation business.

I like this deal because in a slowing economy, which is what I foresee ahead, entertainment is counter-cyclical and if UTA continues to grow, it will prove beneficial for all parties over the long run.

Below, Firefly3 Principal Tom Freston discusses content creation and the television and online marketplace. Bloomberg's Cory Johnson also reports on "Bloomberg ‹GO›." (March 2016).

And United Talent Agency has signed rapper, actor and producer Common in all areas. I'm so happy UTA, PSP and Investcorp finally see the common light! :)