KKR set to acquire $800 million stake in FGS Global from WPP

WPP is close to finalizing the sale of its controlling stake in financial communications firm FGS Global to private equity firm KKR for around $800 million, Financial Times has reported.

The announcement could come as early as Wednesday, coinciding with WPP's next financial results report. The deal involves WPP selling its 50.5% stake, valuing FGS at approximately $1.6 billion. This transaction will increase KKR's stake from 30% to about 80%, while FGS partners and management will retain the remaining equity.

Sources indicate that maintaining partner equity is crucial for incentivizing retention, though the deal had not been finalized as of Tuesday. Both WPP and KKR have declined to comment. 

FGS Global, created from the merger of Finsbury, Hering Schuppener, and Glover Park Group, operates nearly 30 offices globally and serves over 1,600 clients. Last year, the group earned approximately $450 million in revenue and $95 million in earnings before interest, tax, depreciation, and amortization.

KKR aims to grow FGS and explore future exit opportunities through sales or public listings. The financial communications sector is seeing consolidation as companies merge to offer comprehensive services. However, such deals are often complicated by their dependence on high-profile advisers. For example, CVC's investment in Teneo faced challenges due to scandals and the departure of key founders.

The sale of FGS follows WPP's recent appointment of Philip Jansen as its new chair, suggesting potential strategic shifts for the company. The deal is expected to strengthen WPP's financial position, which has been underperforming compared to rivals like Publicis. 

WPP is increasingly focusing on technology, using AI and data-driven services to enhance its marketing campaigns. FGS has been considered less central to WPP's core operations, which include prominent PR firms such as Burson, BCW, Hill & Knowlton, and Ogilvy.

Earlier this year, it was revealed that KKR sought majority control of FGS, having already acquired a 30% stake in a deal valuing Finsbury at around $1.5 billion in 2023. This transaction might also postpone plans to float FGS in the next two years, with Goldman Sachs advising WPP on the matter.