Alaris Equity Partners Invests $75.3M in Kubik LP

Alaris Equity Partners has injected $75.3 million into Kubik LP, a move that simultaneously triggers a 3% increase in its quarterly distribution to unitholders. This strategic investment marks Alaris's entry into a new partnership, bolstering its portfolio with a company specializing in custom exhibit design and fabrication for global brands and institutions.

The capital infusion into Kubik, a 40-year-old firm renowned for its work in tradeshow exhibits, brand activations, and immersive museum environments, underscores Alaris's strategy of supporting established businesses with strong client relationships. Gregg Delcourt, Chief Investment Officer at Alaris, highlighted the impressive client roster and the company's consistent execution as key drivers for the investment. Alaris plans to support Kubik's expansion through operational enhancements and targeted acquisitions, aiming to leverage the company's deep-seated expertise.

This partnership is structured as a combination of debt and preferred equity totaling $62.5 million, alongside a $12.8 million investment for a minority stake in Kubik's common equity. The deal is projected to yield an annualized cash distribution of $8.1 million for Alaris, representing an initial combined annual yield of 13%. This yield is designed to adjust annually based on Kubik's revenue fluctuations, offering a dynamic return profile.

The enhanced cash flow from the Kubik partnership directly contributes to Alaris's decision to raise its quarterly distribution by 3%, bringing the annual payout to $1.52 per unit. Steve King, President and CEO of Alaris, emphasized that this increase aligns with the company's commitment to stable and growing distributions for its unitholders, while maintaining a conservative payout ratio below its 65-70% target. The preferred distributions from Kubik are expected to add approximately $0.07 per unit annually to Alaris's distributable cash.

Kubik, headquartered in Toronto, boasts a blue-chip client list that includes major corporations like Philips and Honeywell, as well as leading automotive manufacturers such as Kia, Nissan, BMW, and Lexus. Its subsidiary, Kubik Maltbie, has a distinguished track record in developing significant museum exhibits, including projects for the United States Holocaust Memorial Museum and the Empire State Building Observatory Experience. This broad operational scope within the experiential marketing and corporate environment sectors positions Kubik as a robust partner.

The investment in Kubik aligns with broader market trends favoring experiential marketing and customized brand engagement solutions. As companies increasingly seek to create memorable interactions with consumers, firms like Kubik, offering end-to-end fabrication and design services, are well-positioned for growth. Alaris's structured equity approach provides capital for liquidity to existing shareholders while enabling Kubik to pursue its strategic objectives without compromising its operational integrity or core values, as noted by Kubik's President, Elliot Kohn.