Michael Rubin’s Fanatics now worth nearly $13 billion

Two more Philadelphia companies have attracted hundreds of millions of dollars in new private investment as the bull market in U.S. stocks feeds bets on growing businesses.

Michael Rubin’s Conshohocken-based investment group has raised $320 million more from private investors to buy more sports brands and factories, according to people familiar with the deal. The firm is also weighing plans to list its sports-gear distributor and manufacturer Fanatics on the stock market through an initial public stock offering (IPO).

The new investment in Fanatics, which employs more than 8,000 nationwide, raises the company’s valuation to nearly $13 billion — twice what it was worth at its last capital-raising in 2020.

And Arcosa, a Dallas-based construction supplier, has agreed to pay $375 million for Center City-based StonePoint Materials, said founder Colin Oerton. He said the deal is just in time to help StonePoint’s stone-crushing plants in Pennsylvania and six other states win road-supply contracts and other business as part of Congress’ planned infrastructure spending.

Rubin’s company is worth more than the stock-market value of fast-growing Philadelphia-based store chain Five Below, a recent investor darling for its record of boosting sales despite pandemic restrictions, and nearly as much as global chemical-maker FMC, also based here. Fanatics’ holdings include offices in Jacksonville, Fla.; New York, and the San Francisco Bay Area, as well as Kynetic, Rubin’s holding company, in Conshohocken.

The new Fanatics funds were supplied by investors led by Silver Lake, the Los Angeles buyout firm that also backed Airbnb, Ant Financial, and, formerly, Wayne-based Sungard Data Systems, among others. The investors also include Fidelity, Neuberger Berman and Franklin Templeton fund groups, New York investor Joshua Kushner’s Thrive Capital, and Major League Baseball, a customer of Fanatics’ Majestic baseball-uniform factory in Easton, Pa. All had invested previously in Fanatics.

The company said its sales surged last year as the pandemic kept shoppers out of rival traditional retail stores; Fanatics expects that its revenues will keep rising, and top $3 billion for the first time this year.

Fanatics plans to use the new money to expand its “vCommerce” online sales model, and to buy more product rights and entire companies in the U.S. and abroad.

Fueled by rising sales and eager investors, Fanatics last year bought Texas-based Top of the World, a hat-maker, and Minnesota-based WinCraft, which makes team towels and other sports-related items.

That showed the company’s 2017 purchase of Majestic, which local officials said saved hundreds of union-labor jobs, was not a one-off deal but part of a commitment to made-in-the-USA products, defying a long trend by U.S. clothing marketers of using the cheapest foreign suppliers.

Fanatics also cut a deal with Barnes & Noble and Lids, the hat company, to operate 770 college websites and book sales operations. And it is launching Fanatics China to sell to China sports fans, in a deal funded by Hillhouse Capital, an Asia-focused investment firm.

Arcosa Inc.’s purchase of Philly-based StonePoint Ultimate Holding LLC comes with 400 employees at its Center City offices and 20 stone crushers in Morgantown and Uniontown, Pa., and six states farther south.

With annual sales of more than $100 million, StonePoint turns outcrops of the Appalachians and other materials into aggregates used in roads and concrete building foundations.

Joining the larger company (Arcosa sales topped $1.9 billion last year, up from $1.7 billion in 2019), will make it easier for StonePoint plants to win business as Washington steps up spending on U.S. highways and other infrastructure, said Oerton, who founded StonePoint and guided it through previous expansion, backed by Sun and other investors.

It is a profitable business: StonePoint expects to earn $30 million on sales of $117 million this year. Antonio Carrillo, Arcosa’s chief executive, calls StonePoint’s staff and plants “an outstanding strategic fit” that brings the company’s operations into the Northeast. Oerton said his team will continue to run and staff operations here.