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Ennovance Capital seeks buyouts, recapitalizations, growth equity and special situation investments in the chemicals, specialty materials, and healthcare sectors. We would invest up to $200 million in each portfolio company, however we have the capability to provide significantly more equity capital for each investment from our strategic co-investor base with whom we have strong relationships. While primarily focused on domestic businesses with revenues between $20 million and $750 million, our sector-focused model affords us the flexibility to pursue a wide variety of investment opportunities. (For financial characteristics of a typical investment, please review the strategy section.)
Our representative segments of interest include: · Personal care ingredients · Flavors and fragrances · Nutritional and food ingredients · Chemical processing, distribution and services · Water treatment products, solutions and services · Agrochemicals · Oilfield chemicals and services · Petrochemicals and their derivatives · Lubricants, fuel additives and process chemicals · Shale gas finds · Coatings, adhesives and sealants · Household, Industrial & Institutional ingredients · Plastics, composites and additives · Construction and transportation materials · Pharmaceuticals: specialty additives, generics, services · Healthcare services, specialty laboratories and logistics · Specialty materials and fine chemicals · “Green” chemistries and clean technology solutions
The Broader Chemical Industry
Companies within the broader chemical industry can be classified into four major categories: Basic (also known as commodity, Industrial), specialty, allied products, specialty materials, diversified and pharmaceutical. These categories contain hundreds of different micro-segments, services and product lines, with numerous companies that can benefit from an Ennovance partnership; several of these sectors are listed in this diagram.
Evidently, products from the broader chemical industry play a role in our everyday lives, from soaps and shampoos we use in the shower, to the plastic of our bottled water, to the hardware components of our laptops. For nearly every product we use in our day-to-day lives, a chemical company at some point provided specific, essential ingredients to the end product. The substantial scope of the broader chemical industry presents ample investment opportunities for Ennovance Capital across all stages of the industry value chain (a generic diagram is illustrated here).
As you progress further down the value chain within the broader chemical industry, a great variety of differentiated products emerge, many of which are manufactured by companies that could utilize partnerships with private equity firms like Ennovance Capital.
Chemical Industry FAQs
Q: Is it true that the broader chemical industry is extremely consolidated? A: Not at all, in fact, the top 3 firms, in terms of market share, hold less than 30% of the chemical industry, combined. Consolidations typically occur at the plant or product line level; many investment opportunities exist downstream in middle-market and lower-middle-market companies.
Q: Is the broader chemical industry a big detriment to the environment? A: The industry has taken various measures to reduce its environmental footprint resulting in a 44% decline in toxic releases from 1988 to 2008 (during this period, total industry output actually increased 45%).
Q: Is the broader chemical industry cyclical? A: As with most industries, the broader chemical industry’s overall movements tend to mirror the movements of the overall economy due to the diversity of the industry’s end markets (food, personal care, household care, industrial, automobile, construction, etc.). However, the broader chemical industry is comprised of hundreds of micro-segments, so each micro-segment has its own unique characteristics that are correlated to the specific end market(s) where it plays. Thus, despite the relative cyclicality of the broader chemical industry overall, there are plenty of micro-segments that are actually relatively non-cyclical.
Q: Is the broader chemical industry capital intensive? A: No, over the past decade, net capital spending (capital expenditures less asset sales) as a percentage of sales has been lower than that of the average industry.
Q: What is the level of regulatory risk within the broader chemical industry? A: The broader chemical industry has implemented a voluntary, self-regulating body, the Responsible Care Program, to improve the health, safety and environmental aspects of the industry. The organization acts proactively to ensure that member organizations are voluntarily employing certain standards prior to the enforcement of government mandates. |
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