KKR & Co. will reap about $1.3 billion in profit on its three-year ownership of safety-equipment maker Capital Safety, a person with knowledge of the matter said.
The private equity firm, run by billionaire cousins Henry Kravis and George Roberts, agreed Tuesday to sell the maker of harnesses and lanyards to 3M Co. in a $2.5 billion transaction. KKR, which put $615 million into Capital Safety in 2012, will get $1.9 billion in proceeds including a dividend issued last year, more than triple its initial investment, said the person, who requested anonymity because the details are private.
Kristi Huller, a KKR spokeswoman, declined to comment on the deal’s return.
KKR is notching wins as it prepares to market a new private equity fund later this year targeting as much as $12 billion. The New York-based firm has beat analysts’ profit expectations in five of the past seven quarters, benefiting from sales of drugstore chain Alliance Boots GmbH, digital-photo company Fotolio, financial-data provider Ipreo Holdings LLC, South Korean beer maker Oriental Brewery Co., retailer Dollar General Corp. and Biomet Inc., a maker of artificial hips and knees.
Capital Safety, based in Bloomington, Minnesota, developed more than 100 safety products and doubled its portfolio of patents to more than 450 since 2012, said Pete Stavros, KKR’s head of industrials investments. It also acquired three companies and expanded its safety training and sales in China, Brazil and the Middle East.
Demand for safety equipment is growing quickly, especially in emerging markets as worker-protection regulations increase and multinational companies expand. Capital Safety has posted annual revenue growth of 10 percent in the past four years, according to a statement Tuesday announcing the transaction.
“In the U.S., 1,000 people fall to their deaths on the job every year,” Stavros said in an interview. “Capital Safety has this burning desire to fix it. There’s a humongous value proposition that is playing out, which is what 3M saw.”
Stavros said he negotiated directly with 3M Chief Executive Officer Inge Thulin over dinner in New York. 3M, based 13 miles from Capital Safety in St. Paul, Minnesota, is “the perfect home” for the company because of its global footprint and expanding personal safety business.
“It was a difficult decision to sell,” said Stavros, who served on the company’s board with KKR’s Josh Weisenbeck and Brandon Brahm.
The deal is 3M’s biggest acquisition in its 113-year history, according to data compiled by Bloomberg.