HIG explores sale of Germany-based HCS Group

Georgina Barnard , Ryan Gould and Kezia Joseph
28 September 2022

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HIG Capital is revisiting a potential sale of German specialty chemicals company HCS Group, four sources familiar with the matter said.

Rothschild has been retained to test market appetite for the Frankfurt-headquartered supplier of hydrocarbon and specialty solutions, the sources said. Teasers have been distributed to a select group of buyers, one of them added.

HCS Group, which owns the Haltermann Carless brand name, is being marketed off EBITDA of approximately EUR 50m, according to three of the sources. However, another of the sources cited EUR 30m as a more realistic EBITDA target.

The vendor is likely to proceed cautiously with any sale process amid concerns around the availability of financing, one of the sources noted.

Current market uncertainty limits the breadth of the bidder pool, another of the sources said. US-based private equity firms with expertise in the downstream refinery sector could show interest in HCS Group, with any potential suitor likely to be judged on their risk aversity, he added.

HIG acquired HCS Group, formerly known as Haltermann, from Dow in 2011. The sponsor first attempted an exit in 2016 through Moelis and The Valence Group, with a deal said to be worth EUR 500m at the time.

The process fell flat on a mismatch between vendor and bidder price expectations, according to one of the sources, who added that HCS had drawn limited interest from strategic players.

HCS Group was briefly touted as an IPO candidate following the failed sale attempt. The company has since divested two of its units, with the sale of Haltermann Carless Fluids business to UK petrochemicals player Solventis in 2017, and its Oxo Products division to US-based investment firm Aeicon in 2020.

HCS Group manufactures hydrocarbon specialty products used for a range of applications, from downstream chemicals and pharmaceuticals to printing inks and performance fuels.

The company has operations in Germany, France, the UK, the US, and Japan, with distribution channels in over 90 countries, according to its website.

HIG Capital declined to comment. HCS Group and Rothschild did not respond to requests for comment.