PRIVATE EQUITY INVESTING
In Specialty Chemicals Companies
Thu, Oct 24 @ 8:00 am - 5:00 pm
Deal Making in Specialty Chemicals Continues to Set the Bar Higher & Higher
Private Equity Investing in Specialty Chemicals Companies
Valuations of specialty chemicals companies are soaring to record levels, and private equity investors aren’t tamping down their acquisition pace.
Combined with the late-cycle economic environment and a private equity market flush with cash, it’s no wonder PE investors continue to deploy capital.
According to ThomasNet, more than 10,000 American businesses produce over 70,000 chemical products.
Those include an enormous “laundry list” of specialty chemicals such as adhesives, polymers, polymer additives, coatings, coating additives, lubricants, food additives, resins, and countless others that offer significant potential for private equity investors.
And PE investors are willing and able to pay a premium for these companies. Deal multiples are already one to two turns higher than standard valuations. As a result, investors are asking themselves two questions — how much higher will valuations go, and how long can these elevated values persist?
In the face of such a high price environment, private equity investors are emphasizing –
- Buy & build strategies, e.g., Huron Capital’s creation of platform Brudner Polymer last year.
- Carve outs, e.g., the recent sale by AkzoNobel of its specialty chemicals business to the Carlyle Group and GIC.
- Growth, e.g., Jordan Company’s acquisition of Dubois Chemicals.
There are also specific submarkets where deal activity is particularly buoyant —
- Adhesives & sealants – One third of the $50 billion global adhesives market is controlled by five large companies, but the remaining two-thirds consists of hundreds of small- and medium-sized companies; thereby creating a huge pool of attractive acquisition candidates for private equity investors such as Arsenal Capital’s Meridian Adhesives Group which was recently formed and has already acquired 5 adhesives companies.
- Industrial coatings — The $25-30 billion industrial coatings market is projected to grow 5.4 percent annually through 2020, spurring an increased level of platform activity by private equity buyers who are aggressively pursuing bolt-on acquisitions. High Road Capital Partners’ portfolio company — U-C Coatings — recently acquired Contechem. The combined companies now provide complementary products for protecting freshly cut lumber and logs.
- Chemical distribution — Gross margins for distributors of specialty chemicals are significantly higher than those of commodity chemicals — as much as 40% for complex chemicals like pharmaceutical additives. Distributors also play a critical role in the supply chain, which makes them top targets for private equity investors. Look at Azelis, which EQT and Canada’s Public Sector Pension Investment Board acquired in 2018, and recently added on Chemroy Canada Holdings, an Ontario-based specialty chemicals, plastics, and food ingredients distributor.
But elevated valuations are not the only hurdle facing investors in specialty chemicals.
With the Trump administration waging trade wars on key partner countries, the focus on trade tariffs and how they are affecting specialty chemicals, imports and exports, and the supply chain in the sector, is higher than ever.
In a statement released by the Society of Chemical Manufacturers & Affiliates (SOCMA), it’s estimated that the Trump administration’s early May decision to raise tariffs to 25 percent on $200 billion in Chinese imports will disproportionately burden specialty chemical manufacturers. In many cases, China is the sole supplier of the raw materials and “building block chemicals” that specialty chemical supply chains depend on.
Arsenal Capital Partners
Thursday, October 24, 2019
8:00am – 5:00pm
Midtown Manhattan, NY
Register now to gain valuable insights as 20-plus speakers
assess the outlook for private equity investing in specialty chemicals
at The Capital Roundtable’s all-day conference
on Thursday, October 24, in Midtown New York City.
Three Key Reasons Why You Should Join Us
- Understand how strategic investors and family offices are driving up valuations of specialty chemicals companies.
- Hear the latest developments and investment opportunities in the CASE (coatings, adhesives, sealants, and elastomers) sector.
- As class-action lawsuits increase in the industry, find out how to keep litigation risk at bay.
- What are the most attractive segments in specialty chemicals?
- Which segments of the market have reached high levels of consolidation?
- How will an economic downturn affect the specialty chemicals industry?
- What are the keys to enhancing value and increasing exit multiples in specialty chemicals?
- How valuable are operating partners in growing and improving specialty chemicals portfolio companies?
- What are the best exit routes for specialty chemicals companies?
- What does the renewed negative attention to the plastics industry and plastic waste mean for investors?
- What are the best strategies to invest in biopolymer and other sustainable materials?
Recent Middle-Market Specialty Chemicals Deals
- In November 2018, One Equity Partners said it would sell PeroxyChem, a manufacturer of peroxygen chemistries, to German Evomik Industries AG, a publicly-traded global specialty company, for $625 million.
- In April, Vantage Specialty Chemical Holdings, a portfolio company of H.I.G. Capital, agreed to acquire Spain-based Textron, a provider of natural oils for the personal care, food, and chemical industries.
- Avantor, the successor to Covidien’s specialty chemicals arm, acquired by New Mountain Capital in 2010 for $280 million, and completed a $3.8 billion IPO in May.
- In the spring, Golden Gate Capital sold ArrMaz, which produces specialty chemicals for the mining, crop nutrients, and asphalt paving industries, to Arkema Group for about $570 million.
- A consortium led by KKR acquired Taipei-listed LCY Chemical Corp., which produces specialty chemicals with a concentration on thermoplastic elastomers and performance plastic, in a $1.56 billion stock deal.
- Comvest Partners acquired VanDeMark Chemical in April, 2019
Brian Orkin is an investment partner at Arsenal Capital Partners where his responsibilities include investment strategy development, deal origination, and transaction execution as a member of the fund’s specialty industrials team.
Prior to joining Arsenal in 2010, Mr. Orkin was a principal at The Anderson Group LLC, a private equity investment firm focusing on buyouts and control investments in lower middle-market manufacturing, distribution, and service businesses. Prior to joining The Anderson Group LLC, he co-founded a bank holding company which acquired a national bank in Florida. Mr. Orkin started his career as a corporate finance attorney with law firms in California and Pennsylvania.
Mr. Orkin earned a JD from California Western School of Law, an MBA from the executive program at the University of Pittsburgh, and a BA from the University of Michigan.
This Capital Roundtable conference in midtown, New York City, is all-business, all-targeted, all-designed to be a completely focused day of practical information and revealing insights about specialty chemicals companies. You’ll gain valuable insights from —
- Three informative panel discussions
- Two revealing keynote presentations
- Real-world perspectives from company investors
- Industry outlooks from noted sector experts
- War stories and lessons learned from experienced hands
- Brian Orkin, Investment Partner, Arsenal Capital Partners
- Burt Alimansky, Chairman & CEO, The Capital Roundtable
Preliminary Speaker List
- David P. Faris, Managing Director, Moelis & Co.
- Rahul Goyal, Partner, AEA Investors
- Robert Haswell, Partner, Dominus Capital LP
- Andrew Hinz, Managing Director, Grace Matthews Inc.
- James A. Holmes, Managing Director & Head–Chemicals, FMI Corporation
- Adam Hunia, Director, Lincoln International LLC
- Timothy Knight, Board Member, Meridian Adhesives Group LLC
- Derek McNulty, Managing Director, Jefferies LLC
- Ryan J. Meany, Managing Partner, Edgewater Capital Partners LP
- Kevin D. Margolis, Partner, Benesch LLP
- Federico G.M. Mennella, Managing Dir. & Head–Chemicals & Materials, Rothschild & Co.
- Cameron Morris, Dir.–Industrials, William Blair & Co. LLC
- Brad Morrison, Director, Harris Williams & Company
- Christopher J. Mudd, Chief Executive Officer, Juniper Specialty Products & SGCE
- Jared Mudge, Director, Valence Group LLC
- Dan Pelton, Chief Executive Officer, Meridian Adhesives Group LLC
- James Reilly, Director, Lazard Middle Market LLC
- Ed Rose, Senior Partner, Mill Rock Capital Management LP
- David Ruf, Managing Dir. & Head–Chemicals & Materials, KeyBanc Capital Markets Inc.
- Roy Seroussi, Investment Partner, Arsenal Capital
- James F. Ward, Managing Director, Artemis Capital Partners LP
- Michael Zukas, Vice President, Huron Capital
7:30am – 8:30am
Networking & Registration & Breakfast
8:30am – 9:00am
Welcoming Remarks & Audience Self-Introductions
9:00am – 9:30am
Conference Chair’s Introduction —
- Brian Orkin, Arsenal Capital Partners
9:30am – 10:30am
First Panel —
What’s on the Horizon for Specialty Chemicals? What Are Buyers & Sellers Looking for?
10:30am – 11:15am
Networking & Coffee
11:15am – 12:00pm
Morning Conversation —
Catalysts for Change — Trade Disputes, Evolving ESG Standards and the Steady March Toward Sustainability
12:00pm – 1:00pm
Networking & Luncheon
1:00pm – 1:30pm
Keynote Interview —
James Reilly of Lazard Middle Market will interview Dan Pelton of Meridien Adhesives Group
1:30pm – 2:30pm
Second Panel —
Driving Performance — Operational Strategies that Enhance Value
2:30pm – 2:45pm
Networking & Dessert
2:45pm – 3:30pm
Afternoon Conversation —
PE Investment Strategies that Yielded Great Result — Buy & Build, Carve-outs, Restructurings, & Other Alternatives
3:30pm – 4:30pm
Third Panel —
The Value Creation Challenge — Driving Your Exit Strategy from the Inception of the Deal
Networking & Adjournment
Space at this conference is limited, so register as soon as possible to assure yourself a seat. To avoid disappointment, please contact Chris Agar today to confirm your attendance at 212-832-7300 ext. 0 or firstname.lastname@example.org.
Please note that Capital Roundtable limits the number of registrants from a single firm to three.
Best Rate – Early Registration
Save $300 off the standard fee of $1,495 when you register by Friday, September 6. Just $1,195.
Save $200 of the standard fee! Register by Friday, September 27, and the fee for the conference is $1,295.
$1,495 increasing to $1,595 day of conference, space permitting.
$1095 each until Friday, September 27, when you register two or more people to attend from the same company. This rate increases to $1295 each after Friday, September 27.
You can pay by credit card (using the links above or below) or by check. Mail your check and business card to: New York Business Roundtable Inc., 747 Third Avenue, Suite 200, New York, NY 10017.
Can’t attend but want to hear the program? You can buy the audio package along with the handounts.
This event is sponsored by:
Alvarez & Marsal Holdings
Blaige & Co.
BlueArc Capital Partners
Carter Morse & Mathias
CCMP Capital Advisors
Centripetal Capital Partners
Credit Suisse Securities
CVC Capital Partners Advisory
Edgewater Capital Partners
High Road Capital Partners
Hilltop Private Capital
Huron Capital Partners
Lazard Middle Market
Lion Chemical Partners
Long Point Capital Inc.
Mill Rock Capital Management
Mitsubishi Chemical Holdings America
Odyssey Investment Partners
OMERS Private Equity
One Rock Capital Partners
Perella Weinberg Partners
Platte River Equity
Post Capital Partners
Rothschild & Co.
Seaport Global Securities
Sidereal Capital Group
Silver Leaf Partners
Society of Chemical Manufacturers & Affiliates
Stifel Financial Corp.
Vantage Specialty Chemicals
Young & Partners