The private equity (PE) sector is playing an increasing role in the evolution of the additive manufacturing (AM) landscape, particularly when it comes to the services sector in the U.S. One of the key firms driving this trend is CORE Industrial Partners, which has been consolidating the North American market for advanced manufacturing bureaus alongside other PE groups. Now, CORE has demonstrated that it will only continue to do so by the successful closure of $887 million in capital commitments.
Significantly surpassing its targets with $685 million for CORE Industrial Partners Fund III, L.P. (Fund III) and $202 million for CORE Industrial Services Fund I, L.P. (Services Fund I), has raised more than $1.58 billion in limited partner commitments over the past five years. Fund III is set to continue CORE’s flagship strategy, focusing on the acquisition of manufacturing and industrial technology businesses. CORE aims to leverage its investment and operational expertise to spur growth and generate long-lasting value.
Fathom Manufacturing Facility at Hartland, Wis. Headquarters. Image courtesy of Fathom.
The introduction of Industrial Services Fund I marks a strategic pivot towards the industrial services sector, which is currently experiencing significant growth. This shift is driven by the reshoring of industries and the widespread adoption of Industry 4.0 technologies across North America.
“We are extremely proud and humbled by the strong interest and support from both existing and new investors and are grateful for the trust they have shown in us,” said John May, Managing Partner of CORE. “The unwavering support for both fund strategies highlights our dedication to an industrial sector we believe is experiencing significant long-term tailwinds. We remain committed to taking advantage of these opportunities and working hard for our limited partners.”
CORE is, of course, most notable for the formation of a consolidated digital manufacturing service bureau under FATHOM. After a SPAC IPO in 2021, the service bureau faltered financially as the SPAC market and larger macroeconomic market deflated. In turn, FATHOM established new leadership from the CORE team with the possibility that CORE would take the company private.
Additionally, CORE set up a separate, private service bureau made up of smaller, reputable manufacturing companies and dubbed it UPTIVE. At the same time, CORE has backed 3D printer manufacturer 3DXTECH, which combined with its sibling companies that manufacture AM materials. So, while it may seem like the PE firm is firmly focused on services, its investment in 3DXTECH suggests that CORE is flexible in its overall strategy or has a grander vision for the market.
Right now, there are numerous distressed assets in the industry, which present prime opportunities for PE groups. In some cases, these business are even failing to secure acquisitions, forcing them to sell their actual equipment at auctions. We’ve seen this happen to Uniformity Labs and Arevo, but surely there are other AM businesses struggling to find a buyer. In this case, PE companies can sweep in and potentially grab any firm that they might see as having long-term value. If we’ve hit a market bottom, which seems to be the case or soon to be the case, they will have picked up these assets at a pretty penny and can sell them in the future at a higher price, possibly after consolidating them or integrating them into other businesses.
Who CORE buys or backs in the coming year will inform us which direction the market may be headed in and we are sure to see what other PE-backed businesses follow suit. To keep the discussion going, feel free to contact 3DPrint.com. Our Proton Mail account provides an anonymous way to speak with us privately.