As coronavirus wreaks havoc on global business activity, some private equity-backed companies are adapting their core focus to make the most of a tough situation.
See all Private Equity International’s coverage of covid-19 and its impact.
Manufacturers have led the charge when it comes to retooling existing capabilities to produce goods that are in greater demand as a result of the pandemic. Logistics companies, service providers and pharmaceutical businesses are also among those pivoting to meet customer needs.
“It is an entrepreneurial response to this crisis,” Sriwatsan Krishnan, a Mumbai-based partner at consultancy Bain & Co, told Private Equity International, noting that it’s most commonly seen among companies whose core business has seen a demand dip.
“These responses are more a staple of innovative, nimble management teams who have identified opportunities where they can diversify or add value and keep the revenue streams going.”
Here are five examples of portfolio companies that have shifted focus to stay active – and make a difference – during the crisis:
Biopharm – Development Partners International
The Algerian pharmaceutical business, acquired by Development Partners International in 2013, has started producing hydroalcoholic gel for hand sanitising products, DPI partner Sofiane Lahmar told Private Equity International. To this end, Biopharm has converted two production lines that were previously dedicated to the production of creams and gels for topical use. It donated the first 30,000 to various public bodies and will sell further batches “practically at cost”, Lahmar said.
GPA Global – EQT
Hong Kong-headquartered packaging business GPA Global has started manufacturing personal protective equipment to fulfill purchase orders from healthcare providers in Europe and the US, according to an EQT spokesman. The company has shipped 40,000 masks to date and plans to ship an additional 860,000 masks and 50,000 protective gowns. EQT acquired the business in 2017 via its $800 million EQT Mid Market Asia III, per its website.
Interplex – Baring Private Equity Asia
The Singapore-headquartered precision components manufacturer is understood to have refocused a factory in Hangzhou to produce around 1 million facial masks per month, which will be given to its own staff and sold externally. BPEA acquired the business in 2015 via its $4 billion 2014-vintage Baring Asia Private Equity Fund VI, per a statement at the time.
Hilding Anders – KKR
The global mattress producer has begun manufacturing surgical face masks, some of which have been donated to first responders and medical personnel, in five plants across Russia, the Netherlands, Estonia, the Czech Republic and Croatia, according to an April statement from KKR. Hilding Anders, which KKR acquired in 2016, is also understood to be mulling the production of medical beds.
UBTech – Qiming Venture Partners
The Shenzhen-based company normally develops intelligent humanoid robots that can not only walk, but also perform karate, yoga and dance moves. During the coronavirus pandemic, it has instead developed an artificial intelligence-enabled body temperature detection solution that enables users to scan people without close physical contact, according to a statement.
– Carmela Mendoza contributed to this report.