Let’s kick things off with a positive outlook for 2025 as MiddleGround’s Justin Steil is anticipating a renewed focus on exits. The firm is preparing for what it expects to be a robust year for exits, with several sales processes already in the pipeline.
The real estate industry’s shift towards sustainability is gaining momentum, driven by the sector’s contribution to carbon emissions. Permira is the latest private equity investor to make a move in the segment, as the firm is set to acquire an energy and sustainability advisor in real estate from investment firm Genui.
Exits ahead
There will be a rebalancing and a renewed focus on exits in 2025, Justin Steil, partner and head of the transaction team at MiddleGround Capital, told PE Hub in the latest of our 2025 Outlook pieces.
MiddleGround, a mid-market private equity firm headquartered in Lexington, Kentucky, owns several businesses that have performed quite well and are nearing the second half of their ownership stage, Steil said. “So, in the coming 24 months, we’ll be selling businesses as fast as we are buying them and we can’t say that for” 2024 or 2023.
New York-based Steil expects 2025 to be a much more “robust” exit year. MiddleGround is in the early stages of launching several sales processes.
Here’s a snippet from the interview:
Which subsectors in the industrial/manufacturing sector are you most bullish on in 2025?
Despite some cooling in the press about mobility, we still believe there are opportunities to invest around automotive and mobility because of the rate of change. Now it may not be growing as fast as it was or relative to expectations, but we are electrifying with each day that comes, and there is fast and dramatic change with respect to how cars are designed, how cars are built, consumer features – it’s all changing faster than it ever has, and change tends to drive opportunity. So we continue to be big believers in opportunities around mobility trends of electrification, light weighting, advancing autonomous vehicle technologies – we’re going to continue to spend time there.
We also are big believers in advanced manufacturing. A lot of the industrial economy is using technology that is 25-100 years old. So, there is real opportunity in continuing to modernize the manufacturing base. MiddleGround is a big believer in automation. Automation is not about reducing headcount. It’s about getting more out of the labor resources and the human capital that you have. Advanced manufacturing is going to be an area where we will spend time.
We continue to believe even with the change in administration, there will be continued investment in infrastructure where there are still lots of dollars to be invested from previous legislative packages. The reality is that US infrastructure is in need of investment, improvement and rehabilitation.
You can dive into the full story here, where you’ll also find insights into some of the challenges or drivers from macro events, along with its perspective on take-privates.
Here’s a roundup of the 2025 outlook stories PE Hub has published so far:
Immense growth potential
Lastly, let’s look at a services deal where Permira has agreed to acquire a majority stake in Westbridge Advisory, an energy and sustainability advisor in real estate, from Genui.
Frankfurt-based Westbridge advises real estate clients in procuring energy and reducing their carbon footprint, providing services such as energy procurement advisory, green building certifications, ESG data management and sustainability consulting.
The sustainability trend in real estate provides “immense growth potential” for businesses like Westbridge, said David Brückmann, managing director in Permira’s services sector, in a statement.
The company has achieved double-digit revenue and profitability growth, thanks to increasing demand for green energy products and corporate social responsibility and ESG compliance in the property sector, according to a release. Permira aims to support the company’s organic and acquisitive growth, particularly in its plans to expand internationally, it said.
For more insights, take a look at this look-back piece on the European services sector to see how it performed in 2024.
