Specialty chemicals business pique interest of PE players

IN THE PAST 10 DAYS, TWO PE INVESTORS HAVE STRUCK DEALS IN THE SPECIALTY CHEMICALS SPACE

MUMBAI: India’s specialty chemicals companies are catching the fancy of private equity (PE) investors due to the robust growth of the industry in the last few years, and with Indian chemicals businesses finding favour with global companies seeking to de-risk their supply chains from China. In the past 10 days, two PE investors have struck deals in the specialty chemicals space, highlighting this interest.

On Tuesday, Baroda-based specialty aroma chemicals company Best Value Chem said that Premji Invest, the investment arm of billionaire Azim Premji, will acquire a controlling stake in the company. Last week, Convergent Finance, an investment advisor to Infinity Investment Management, said that it is pickPE ing up a minority stake in Camlin Fine Sciences Ltd for ₹180 crore.

“The speciality chemicals sector has been one of the most resilient segments within the manufacturing industry in India over the last six months. Certain pockets within Indian specialty chemicals are expected to benefit significantly from the increased implementation of “China, plus one” procurement strategies in a post-covid world,” said Koushik Bhattacharyya, director and head, industrials, at investment banking firm Avendus Capital.

“In the current environment, funds are actively looking for opportunities to invest in market leaders in insulated and high growth sectors and specialty chemicals sector is one of the few sectors that ticks all the boxes for them,” he said.

Speciality chemicals is one of the few bright spots within the broader manufacturing space and has witnessed strong growth both in the home market, as well as in exports. In global markets, Indian chemical companies have reaped the benefits of China curtailing its chemicals industry in the past few years, a trend that is expected to grow further, as global companies seek to find alternative supply sources.

Data from private market deal tracker Venture Intelligence shows that in the five-year period from 2015 to 2019, the sector has seen investments worth just $1.96 billion, across 26 transactions.