PE firm targets more manufacturing, industrial acquisitions in region

Singapore

PRIVATE equity firm ShawKwei & Partners hopes to make two more deals in the region amid "a good time for investing", founder Kyle Shaw told TheBusiness Times as his firm announced the merger of formerly Singapore-listed precision manufacturers Beyonics and Chosen Holdings.

The deals will be in ShawKwei's specialty space of manufacturing and industrials and somewhere in the US$50 million to US$150 million range, said Mr Shaw, whose Hong Kong-based firm has about US$500 million of assets under management.

"There is a lot of uncertainty, so this is a great time to be investing," Mr Shaw said.

Many companies are struggling in the current environment where disruptive factors and economic slowdown are taking a toll on businesses, he explained. The manufacturing sector also has a generation of business owners who are close to retirement age and are looking for an exit.

"There are distressed companies or companies looking for help," Mr Shaw said. "Some companies are also doing quite well and they need money to finance the growth of their business."

Whatever the reason for wanting to sell stock, the public listing route today holds limited attraction because of lacklustre equity markets. That gives private equity funds with dry powder an opportunity to pick up bargains, he said.

ShawKwei is already beginning to integrate and consolidate some of its earlier investments.

The firm announced that it is merging Beyonics, a metal stamping specialist that ShawKwei privatised in 2012 through a US$115 million buyout, and Chosen, a plastic injection moulding company that was delisted in 2015 after a US$51 million deal.

The new company, which will retain the Beyonics name, will have US$250 million in annual revenue. By comparison, Singapore-listed metal stamper Interplex Holdings, which itself is being taken over by Baring Private Equity Asia, reported revenue of US$969.5 million in the year ended June 2015. Sunningdale Tech, a Singapore-listed plastic injection moulding company, posted sales of S$674.5 million in the year ended December 2015.

The merged Beyonics will have 4,800 staff and 14 factories in Singapore, China, Malaysia and Thailand, with customers in the medical, automobile and industrial sectors.

Mr Shaw said his firm does not have a firm plan on exiting the investment yet. In any case, ShawKwei's 100 per cent ownership of Beyonics and Chosen give it some elbow room in terms of exit timing since it fully owns the companies' profits anyway.

"Right now our focus is totally on the operational aspect of the business," he said.