KPS targets Asia exposure with deal

The firm’s investment in industrial thread company American & Efird aims to capitalise on high-growth markets in China and India in addition to the US.

KPS Capital Partners has agreed to purchase manufacturing company American & Efird, a business that will give the firm exposure to high-growth markets in Asia, for $180 million.

North Carolina-headquartered American & Efird manufactures industrial sewing thread, embroidery thread and technical textiles used by producers of apparel, automotive parts, medical supplies, home furnishings and certain industrial products. The transaction is expected to close before the end of the year.

“[A&E] is a company with dominant market shares and positions,” KPS managing partner Michael Psaros told Private Equity International. “The other compelling aspect about the A&E investment is that the company has owned manufacturing assets through non-controlled joint ventures in China, India and other emerging markets. The growth there is exploding and the company is perfectly positioned to capitalise on that growth in those markets.”

The purchase marks KPS’ third acquisition in less than two months, following two deals in September for equipment tool-maker Paladin Brands and building wire and cable company United Copper Industries. KPS invested in A&E from its $2 billion Special Situations Fund III. Like many of the firm’s investments, however, A&E is not a struggling business, Psaros said.

“We are very excited about manufacturing today,” Psaros said. “The time to invest in manufacturing – to buy opportunistically at compelling values – is in the late cycle of a recession…so we’re bulls on the general manufacturing sector.”

Roughly 75 percent of KPS’ investments during its 20-year history have been the purchase of non-core manufacturing or industrial businesses, he added.

In August, KPS sold adult incontinence product maker Attends Healthcare for $315 million, generating a 15x cash-on-cash return and a 120 percent IRR.