L Squared Sells Kanopy to KKR’s OverDrive

June 24, 2021

3 minute read

L Squared Capital Partners has sold Kanopy, a provider of video streaming services, to OverDrive, a portfolio company of KKR.

Kanopy’s video streaming service provides public and academic libraries with free access to more than 30,000 educational films and documentaries. Kanopy is free to use for consumers but is paid on a per-view basis by the institutions that use its services. It is estimated that each title costs institutions approximately $150 per year on average.

Kanopy is used by millions of students and library patrons and is available on all major web, mobile and TV platforms. Many of the titles found on Kanopy, including films produced by A24, Criterion Collection, Paramount, PBS and Kino Lorber, are unavailable elsewhere in the library market.

Now headquartered in San Francisco, the company was formed in Scarborough, Western Australia in 2008 by Olivia Humphrey. Kevin Sayar succeeded Ms. Humphrey as CEO in late 2019.

“L Squared has been the perfect partner for us,” said Mr. Sayar. “Their long track record and deep expertise investing in education technology businesses enabled them to provide the strategic insight needed to scale our streaming platform from serving approximately 1,000 libraries at the beginning of 2018 to over 2,300 libraries today.”

“Kevin’s and the management team’s leadership and innovation allowed the business to grow rapidly into a leading video streaming platform that is used by millions of students and library patrons across the world,” said Adam Kimura, a principal at L Squared. “The combination with OverDrive is a natural next step for Kanopy as together the businesses will deliver a more impactful platform to libraries worldwide.”

Cleveland-headquartered OverDrive provides e-books, audiobooks, magazines and other content to more than 65,000 libraries and schools in 84 countries. OverDrive was founded in 1986 by Steve Potash and initially converted analog media to digital formats using diskettes and CD-ROMs. In April 2015, Rakuten Group, a Tokyo-based e-commerce and online retailer, acquired OverDrive for $410 million. In June 2020, KKR acquired the company from Rakuten.

L Squared invests from $20 million to $100 million of equity in companies that have revenues of $10 million to $100 million and EBITDA of $3 million to $25 million. Sectors of interest include tech-enabled services and software; industrial technology and services; and education technology. L Squared was founded in 2014 and is headquartered in Newport Beach, California.

In September 2020, L Squared closed its oversubscribed third fund, L Squared Capital Partners III LLC, with just over $500 million of capital.

KKR (NYSE: KKR) makes private equity, fixed income, and other investments in companies in North America, Europe, Asia, and the Middle East. KKR was founded in 1976 and in addition to its New York headquarters has offices in 19 cities around the world.