blackstone

Blackstone & Carlyle Take Aim at Singapore Business

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April 16, 2014

Singapore is a location that gets a lot of attention from the private equity (PE) marketplace. Considering the large business and corporate presence in the city-state, this is not surprising. However, the latest news to come out of Singapore in relation to the PE marketplace is something of a surprise.

 

The Business Times reported on April 14th that PE giants Blackstone Group and Carlyle Group were in talks with little-known company Goodpack, a business that leases steel boxes to cargo transporters.

 

Kohlberg Kravis Roberts (KKR) are also reportedly interested in buying Goodpack, with China International Marine Containers Co., who actually provide the steel boxes used by Goodpack, are also named as a potential buyer.

 

Goodpack are reportedly open to takeover offers – founder David Lam holds 32% of the company – and have appointed a financial adviser in Rippledot Capital Advisers to oversee the process.

 

It is reported that a number of banks are involved in financing the deal. Although it may be surprising for those in the know regarding the PE marketplace to see such large and famous firms linked with Goodpack, this isn’t the first time the company has been the subject of speculation or interest.

 

Brambles, who themselves provide wooden pallets and storage solutions to the cargo and consumer transportation industries, have long been linked with a takeover, though a statement on March 20th said previous talks “did not progress,” but while “not currently in active discussions with Goodpack…[it] will continue to monitor the situation.”

 
Goodpack’s attractiveness to investors is being put down to its strong niche and global business network, which makes the company a winner in terms of making money irrespective of prevailing economic conditions in any one location. Another one of Goodpack’s unique selling points is that their solutions are both environmentally friendly and cost effective.

 

The Business Times reported that Goodpack’s clients enjoy savings of 20% against the costs paid to their competitors. Finally, the design patent on the intermediate bulk carriers (IBC’s) that Goodpack use has another 15years to run, and the huge costs of competing in the same niche as the company mean that anyone would need to spend close to $1billion to even think about being on a level footing.

 

Both of these final points are clearly significant barriers to entry and make it easy to see why an investor would look to buy the firm rather than getting together the significant sums needed to compete.

 

Talking about his company, founder Lam told The Straits Times in 2013, “I thought we should look at something that is easy to pack, environmentally friendly, easy to stack and cheaper than the wood we were buying.” The specific industries where Goodpack operate primarily are varied, including manufacturers of tyres, and chemical and juice producers.

 

Their reputation in the automobile industry is expected to see them move into the auto-parts sector as a growth area in 2014. Clients include Michelin and Heinz.

 

The connections of the PE houses linked with a buyout will inevitably open further doors for Goodpack, particularly given the businesses that are currently a part of these firms’ portfolios. This factor could also make Goodpack’s presence a key selling point for the buyer as they look to diversify their own business in the future.

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