Investcorp, the asset management firm specialising in alternative investments, has overseen eight acquisitions so far in the current fiscal year as add-ons to its existing portfolio companies. These will help to maintain and improve value, as well as revenue growth, by enabling the companies to develop a larger market share, to find new markets, to provide improved service and to extend their product range.
Such acquisitions have included the acquisition of All-Pak Inc. by Berlin Packaging, a US supplier of plastic, glass and metal packaging, and of PetroSpect Inspection Services and Pro-Inspect Inc by Moody International, a global provider of technical and inspection services and certification to the oil and gas and infrastructure sectors
Add-on acquisitions have been an important element in Investcorp’s value enhancement model, alongside cost savings and other revenue initiatives. This model, Investcorp told a seminar of its investors in Dubai this week, had generated over $500 million of earnings across the 22 companies in Investcorp’s private equity portfolio during 2009. The private seminar, held at the Jumeirah Emirates Towers hotel, was hosted by Investcorp senior management and private equity experts who flew to Dubai from London and New York for this event.
Investcorp’s President of Gulf business, Mohammed Al-Shroogi told investors: “Our value enhancement model involves both internal initiatives, such as strengthening back-office systems and processes and reducing costs, and external measures, such as strategic acquisitions. In the current climate, value creation has had to come through such operational improvements. The results speak for themselves. Many of Investcorp's portfolio companies outperformed the marketplace during these challenging times.”
Investors heard how the acquisition of All-Pak by Berlin Packaging earlier in 2010 had enabled Investcorp’s portfolio company, Berlin, to increase its market share by 40% and establish its position as the second largest company in the multi-billion dollar wholesale packaging distribution market in the US. The All-Pak acquisition had also allowed Berlin to expand its presence in new markets and increase its product range to address new sectors such as the hazardous goods and laboratory packaging and supplies sectors.
Mr Al-Shroogi said: “The best performing private equity portfolios will be those invested in companies operating in industries that have strong cash flow characteristics and significant value creation opportunities. Specific industry knowledge and understanding is also vital in achieving value creation. The characteristics of the private equity industry have changed and investors are now looking for a laser focus on creating long term value in an increasingly competitive global marketplace.”
