A month after putting the business up for sale, Cinven has signed an agreement to offload CeramTec, a ceramics specialist for multiple industries including medical, automotive and electronics, to BC Partners for a reported €2.6 billion.
The big deal masks one shift in materials and resources deals—and underlines another.
Firstly, the multibillion-euro buy belies the global trend of falling PE deal value and count in the sector. So far, 202 deals have been completed this year with a total value of just over €25 billion, per PitchBook data, compared with 309 deals worth €36.5 billion in 2016, and 369 worth €54.2 billion the year before.
Completed PE deals in materials and resources
For sure, much of this decline can be attributed to the ripple effect of falling commodity prices, as well as a shift away from non-renewables. An increasing number of limited partners, for example, have been reducing their fossil fuel investments in recent years—from universities such as King's College London to pension funds including Waltham Forest—with an eye to eliminating them entirely.
Yet while value and volume are falling, PE is still getting in on the action by increasingly targeting specialized companies. However, rather than going after holding companies with multiple operations, they are focusing on businesses who do one thing very well.
Much like CeramTec's speciality ceramics focus, for instance, the biggest PE deal completed in materials and resources this year was for Atotech Deutschland, per PitchBook data. Carlyle's takeover of the group netted the firm a business specialized in metal and surface plating for technology. Sound like a niche market? Perhaps, but it's enough to generate $1.1 billion in sales for the company with over 4,000 employees.