HighPost Capital Targets More Than Consumer Habits
The consumer-focused PE shop — which recently acquired its first platform company, Chris Hemsworth’s fitness media brand Centr — plans more acquisitions in consumer niches with hyper brand loyalty and awareness.
By Nikitha Sattiraju
7 April 2022
With its first official platform company under its belt and fundraising in the works, HighPost Capital LLC is planning to tackle the worlds of sports, media, wellness, leisure and lifestyle through targeted acquisitions.
“There are many dynamic and compelling long-term consumer shifts in these sectors which we view as permanent,” HighPost co-founder and CEO David Moross said.
These sectors — once thought of as luxuries with high barriers of entry — are becoming more cost-effective and accessible, pulling in a wider range of consumers than before, according to Moross.
More people are seeking out healthier lifestyles, driving the demand for fitness and wellness products. Meanwhile, new communication tools are changing the media landscape, making it possible to get substantial data on the latest lifestyle trends, he said.
The New York firm was co-founded in 2019 by Moross, formerly of sports-, media -and lifestyle-focused firm Falconhead Capital LLC, and Mark Bezos, a former marketing executive and younger brother of Amazon.com Inc. (AMZN) founder Jeff Bezos.
HighPost targets family- or founder-owned businesses largely in the $30 million to $50 million in Ebitda range, but it can go as high as $100 million in Ebitda.
A High-Profile Platform
The firm announced its first platform company on March 31 — actor Chris Hemsworth’s fitness media brand Centr, which it acquired and merged with fitness equipment maker Inspire Fitness, to form Centr LLC.
HighPost will look to make add-on investments for the platform, particularly in new technology and software, Moross said.
Founded in 2019, Centr is a subscription app that offers fitness, nutrition and other wellness-related content. Inspire Fitness provides at-home weight training equipment.
Centr is looking to expand into Europe and South America as well as add content in more languages. The company will also invest in developing new equipment and growing its subscription base.
As part of the March deal, Hemsworth agreed to rolled over his equity and is now the second-largest shareholder in the combined business.
An Eye on Disruption
Centr is an example of HighPost’s strategy to target categories with long-term growth prospects and potential for disruption.
In the fitness industry, HighPost sees a large market opportunity in weight training with potential customers spread across all genders and a diverse age group. Centr will not focus on the cardio side of fitness, which Moross said is “bloated.”
At home fitness boomed during the pandemic, spurring deals such as the Dragoneer Investment Group LLC-led $250 million investment in Tonal Systems Inc. in March 2021 or Lululemon Athletica Inc.’s $500 million purchase of interactive home gym Mirror.
While the category is still expected to grow, a reset seems to be in progress as consumers return to gyms. The shift is highlighted by at-home connected fitness platform Peloton Interactive Inc.’s (PTON) recent woes with a drop in demand and gym chain Planet Fitness’s earnings boost.
“Connected fitness had good growth during the pandemic with people staying at home,” said Matthew Tingler, a managing director at Robert W. Baird & Co. “But I think there are a couple, and not many, that have been able to carry the momentum.”
Centr is one platform that has been successful post-lockdowns, both due to Hemsworth’s popularity as well as its broad range of services, Tingler said.
Outside of Centr, HighPost invested in creator platform Spotter, leading an undisclosed Series C round in 2021. Spotter, which is also backed by Softbank Corp., is one of the largest content owners on YouTube globally with over 1.2 billion subscribers across its channels. Its broad portfolio allows brands to target the right audience effectively, according to Moross.
For its deal with Centr, HighPost looked to Tingler and Joe Pellegrini at Baird for financial advice on the deal. Gary R. Silverman and Sherri Snelson at White & Case LLP were counsel to HighPost.
Cerberus Business Finance LLC provided debt financing.
Centr looked to Evolution Media Capital LLC for financial advice and Gilbert + Tobin for counsel. Sally James at Greenberg Glusker Fields Claman & Machtinger LLP along with Creative Artists Agency LLC served as advisers to Hemsworth. Alastair Corrigall at Greenberg Traurig LLP provided legal advice to Centr co-owner Fitness & Lifestyle Group Topco Pty. Ltd. brand Loup.
Inspire tapped San Francisco-based Harrison Co. for financial advice and Buchalter PC as counsel.