PE Investment Shifting in Commercial Products

Veritas Capital has entered into a definitive agreement to acquire the Illumination and Detection Solutions business of PerkinElmer (NYSE: PKI) for about $500 million in cash. The business provides custom-designed specialty lighting and sensor components, subsystems and integrated solutions to OEMs, and its expected revenue this year is $300 million. Equity funding for the transaction is being provided from Veritas Capital Fund III.

Since the beginning of 2009, 169 investors have invested in 230 companies in the Commercial Products industry, according to the PitchBook Platform. So far in 2010, there have been 98 completed or announced deals, compared to 135 for all of last year. Of the sectors in the industry, Building Products has experienced the largest increase from 2009 to 2010 YTD in the its percentage share of the industry's total deal flow, jumping from 16.3% to 21.6% as investors gear up for an anticipated recovery in housing construction. The sector now attracts the most PE attention, followed closely by Industrial Supplies & Parts at 19.6%. On the other hand, Machinery has experienced the greatest drop, falling from 11.9% to only 6.2%. The most active investors in the space during the same time period include BlackEagle Partners (7 deals), Building Industry Partners (6) and Graham Partners (5).