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SAVCA Newsletter Feature: Q&A with Rockwood Private Equity


Andrew Dewar

Rockwood Private Equity recently announced the R4.1bn sale of plastics manufacturer Safripol Holdings by Rockwood Fund I, Thebe Investment Corporation and Safripol management to Top 100 JSE listed company KAP Industrial Holdings (“KAP”). SAVCA speaks to Rockwood Private Equity CEO Andrew Dewar (“AD”, pictured) about the exit.

What was the rationale behind the timing of the Safripol exit?

Safripol was acquired by Absa in 2006, with the acquisition executed by the same people who now form Rockwood Private Equity. Safripol was a division of Dow Chemicals at the time. The Rockwood team were required to do a full carve out, effect a management buy in and establish a BEE partner (Thebe) as part of the acquisition.

The investment has been held in the Rockwood fund since then, including through the Rockwood/ABSA carve out in 2013. It has also been held through the 2008/9 financial crisis which saw its earnings come under significant pressure.

Safripol was also involved in the competition dispute between Sasol and the Tribunal relating to excessive pricing in propylene and Polypropylene.  Given the maturity of the business, the de-gearing achieved and its stage in the private equity lifecycle the exit of Safripol was seen as appropriate.  

 How did you identify KAP Industrial Holdings as the ideal buyer of the asset?

AD: Rockwood, through its advisors Valance and with the support of its lawyers Roodt Inc., ran a competitive exit process. A number of potential acquirers were identified, including local industry, local private equity and international industrial investors.

Safripol is a good strategic fit with KAP because of KAP’s existing subsidiary Hosaf’s polyethylene terephthalate (PET) business. There are a number of synergies available to them as buyers. They were ultimately the successful bidders in the process, and we congratulate them on their success.

What are some of the highlights of the Rockwood partnership with Safripol over the ten years that you were invested in the business?

AD: We were fortunate to bring an excellent management team into the business as part of our buy in and also inherited a very strong existing management team. The business has been run with almost text book discipline and governance. Through its holding period we faced many challenges. The business is sensitive to a number of external factors such as exchange rates, oil prices and plastic prices as well as global plastic supply and demand factors.

Over the past ten years we have seen extremes in all these variables. In addition, we had to navigate our way through a competition enquiry into the plastics industry and a dispute between Sasol and the Tribunal relating to Propylene and Polypropylene.

Throughout, the management team kept their focus and were successful in executing a number of cost saving and efficiency initiatives which contributed significantly to the success of the business. This is one of the cleanest, most disciplined and well-run companies we have seen. It has been a pleasure to have been involved in the business for this period of time.