Private equity’s next target? Local mom-and-pop marinas with rotting decks and signage that hasn’t been updated in a century.
Driving the news: Private equity activity in the marina sector is heating up: the Financial Times reports that PE firms Centerbridge Partners and KSL Capital Partners are looking to sell their stakes in marina operators, pursuing valuations of about US$1 billion to $4 billion.
Big picture: Over the past several years, there’s been a rush of PE firms snapping up stakes in marina companies. The biggest deal yet happened this past April, when Blackstone Infrastructure completed a $5.65 billion acquisition of Safe Harbor Marinas.
Why it’s happening: PE giants are looking for untapped investment areas as competition increases in traditional asset classes. Marinas just so happen to check a lot of the boxes these firms look for:
- The marina industry is highly fragmented, with lots of independent ownership, making it ripe for consolidation.
- The demand for marina space has increased alongside popularity in boating and the rise of dock-hogging superyachts.
- Marinas provide steady income in the form of annual slip fees, and amenities can be upgraded to generate more revenue.
Why it matters: As more PE money flows in, many of these marinas will likely get spruced up. While this might be a plus for some boaters, small-time sailors could eventually get priced out, especially as firms make it clear that they’re planning to cater to those aforementioned superyachts.—QH