Chemicals: Is private equity getting the mix right?

In recent weeks, Barclays Private Equity-owned Konrad Hornschuch AG has made a significant purchase. Its acquisition of US-based O'Sullivan Films is the second add-on for the company since Barclays acquired the firm in a tertiary buyout in 2008.

While Hornschuch has, so far, been passed around by private equity investors, other firms are making successful exits in the sector. In March this year, BC Partners partially listed Brenntag AG, a global chemicals distributor, on the Frankfurt stock exchange, raising €747.5m.

BC Partners acquired the firm in 2006 from Bain Capital, in a transaction thought to be worth over €3.2bn. At the time of the deal, it was the largest LBO in Germany.

Private equity has also made an impact in restructuring firms weighed down by large debts.

In the case of LyondellBasell, Apollo Management has, this month, backed the debt restructuring of the chemicals giant. The deal, which saw $18bn of debt converted into equity, has allowed the company to emerge from Chapter 11 bankruptcy, which it had been in since January 2009. The firm is now hoping to put its troubles behind it, and plans to list on the New York Stock Exchange later this year.

Fortunes in the sector have been mixed, but growing demand for chemicals in a number of advanced applications, means there is scope for strong companies to find their place in the market.

Perhaps those medieval alchemists were on to something. While they were never going to make gold out of lead, the chemicals they were experimenting with, and the centuries of development since, have become attractive investments in the modern world.

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• Topics
• Buyouts
• Restructuring
• Industrials
• Apollo Management
• Barclays Private Equity
• BC Partners