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Chicago private equity firm buys another 3PL


The Chicago private equity firm Red Arts Capital is back on the takeover trail in the supply chain sector, announcing today that it has acquired Flex Logistics, a privately-owned third party logistics (3PL) provider in Southern California.

As recently as June, Red Arts had also acquired the contract packaging services provider Coregistics. And in 2021, it sold the less than truckload (LTL) transportation companies Midwest Motor Express Inc. and Midnite Express Inc. (MME) for $150 million to truckload carrier Knight-Swift Transportation Holdings Inc.

Terms of its latest deal were not disclosed, but the firm said that it had completed the move through another of its portfolio companies, Partners Warehouse, a 3PL with operations in warehousing, value-added services, and transportation.

Eastvale, California-based Flex holds nearly 900,000 square feet of warehousing space and services customers in the consumer products, food and beverage, spirits, and automotive industries.

According to Red Arts co-founder, co-CEO, and managing partner Nick Antoine, the firm sees rising demand for warehousing services due to a sharp lack of real estate capacity in the industrial sector and rising consumer demand for products. At the same time, e-commerce shoppers are putting pressure on retailers to provide next-day or same-day delivery, which is leveraging a change from massive warehouses located in rural areas to smaller properties closer to urban populations, allowing faster last-mile delivery routes.

“As e-commerce becomes a bigger part of how we consume products and manage inventory, we’re seeing a shift to regionalization. Companies need facilities with closer proximity to distribution and transportation networks,” Antoine said.

Logistics sites located closer to large cities can also have better access to scarce labor pools, which is a major challenge in the supply chain area, he said. But Antoine said that moderate and small sized businesses—including Coregistics and Flex—are often better at retaining those valuable employees than large corporations. That’s because they’re able to work more closely with employees, avoid difficult working conditions, and offer a supportive workplace culture.

Following the acquisition, Flex will continue to operate independently of Red Arts’ other portfolio companies as it takes advantage of economic “tail winds,” he said. “As covid has showed us, the fabric of our lives is based upon the supply chain. When everything shut down, we still needed things delivered and inventory managed,” Antoine said.


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