TPG Capital to buy Transplace, extending supply-chain reach

TPG Capital to buy Transplace, extending supply-chain reach

Transplace has traded hands among private equity companies three times since 2009.

A global equity firm’s plan to add Transplace to its supply-chain portfolio is the latest example of how rapidly evolving shipper expectations and demands are drawing investment to logistics and accelerating the development of supply-chain technology demanded by customers.

TPG Capital said Monday it would acquire Transplace, a $1.6 billion company currently owned by Greenbriar Equity Group, by the end of September. The deal follows other recent logistics acquisitions, notably the purchase of Special Logistics Dedicated by J.B. Hunt Transport Service, and plans by XPO Logistics to spend as much as $8 billion on acquisitions.

TPG is partnering with Transplace’s management, led by CEO Tom Sanderson and Frank McGuigan, president and chief operating officer, to buy the company, the 15th-largest US third-party logistics (3PL) company, according to SJ Consulting Group data. Terms of the transaction were not disclosed.

“Our expectation is we’ll be able to leverage some of the terrific resources TPG has to accelerate innovation,” McGuigan said in an interview Monday. “We’re going to double down on our business model of strong organic growth and strategic acquisitions.”

TPG will be the third private equity group to own Transplace since 2009, starting with CI Capital Partners and followed by Greenbriar. "Each relationship has been beneficial," McGuigan said. TPG will increase the "velocity" of technology development and expansion, he said.

The Transplace acquisition underscores the importance of technology that can provide greater supply-chain visibility for shippers and drive down supply-chain costs, as well as the increasingly close-knit integration of technology and logistics management. Transplace has invested heavily in its transportation management system. The deal also puts a spotlight on private equity interest in logistics and supply-chain technology.

The new equity partnership “validates that shippers are still looking for a path toward technology-enabled services in conjunction with significant domain expertise in their business vertical,” McGuigan said. “It’s not enough to have technology, you have to make that technology perform.” Shippers, 3PLs, and investors all want to realize the value of the technology they have brought to the marketplace.

It is not just trendy “Uber-for-logistics” startups that are winning substantial investment from private equity firms. Last year Warburg Pincus invested $255 million in BlueGrace Logistics, a rapidly growing 3PL company. Transplace itself has grown through acquisition, purchasing four companies in the last four years, including Canada’s Lakeside Logistics in 2016.

Many of those acquisitions were made with technology in mind. “It is absolutely essential in the managed transportation business to have the technology that puts you in control of your destiny,” Transplace CEO Tom Sanderson said in May at the company’s shipper conference.

Transplace focuses on the North American logistics market, and has grown rapidly since it was founded in 2000. In the past 10 years, it has climbed 10 places on the JOC.com ranking of the Top 50 Global 3PLs produced by SJ Consulting Group, from 47th place to 37th. About half that growth has been organic, and half derived from acquisitions, Sanderson and McGuigan said.

About half of its revenue is derived from transportation management, with the other half coming from intermodal, cross-border freight, and truck brokerage. Transplace will do nearly $50 million of business in Mexico this year, Sanderson and McGuigan said at the conference.

The Transplace acquisition is the third supply-chain investment within a year by TPG, which has more than $73 billion in assets under management. Last August, TPG acquired a majority stake in Transporeon, a European cloud-based logistics software company. In May, TPG partnered with Llamasoft, a US-based supply-chain modeling and design firm.

Transplace brings to the portfolio an established 3PL platform with more than $5 billion in freight under management. “These are three completely separate businesses,” McGuigan said. “Finding value across them hasn’t been discussed at this point.” But Transplace already is a Llamasoft customer and is quite interested, he said, in Transporeon’s technology.

“Most of our business is in North America, so we’re quite interested in the global implications of that software,” McGuigan said. “We see global expansion as a growth vector for Transplace.”

Contact William B. Cassidy at bill.cassidy@ihsmarkit.com and follow him on Twitter: @wbcassidy_joc.