On October 18th of this year, Bahrain-based investment firm Investcorp announced that it would acquire Kee Safety Ltd (“Kee Safety”) from Dunedin LLP and LDC for an enterprise value of $370 million.
Investcorp is a leading global manager of alternative investments, which the company offers to its high net-worth clients regularly. Moreover, Investcorp is mid-market private equity firm, investing primarily in both North America and Europe. With more than $21.4 billion of assets under management, Investcorp strives to combine the growth dynamics of the Gulf capital and the alternative investment industry with “international management discipline”. The Group claims that its defining characteristic revolves around how each client investment is determined on a deal-by-deal basis in accordance with different investors’ preferences. While in the past 30 years, Investcorp has pursued projects in sectors ranging from technology to business services, as of June 2017, a new mission has guided its pursuits: to double assets under management (AUM).
UK-based Kee Safety Ltd is the world’s largest supplier and distributor of fall protection solutions, including safe access and safety railing systems. In this way, the company’s B of D prides itself on the ability to provide the highest level of safety solutions to every industry around the world, from multi-national corporations to installers. Kee Safety’s B of D is constituted of Dunedin Capital Group Ltd, a private equity firm specializing in direct fund investments and middle market buyouts.
Kee Safety is an impressive pickup for Investcorp. The former has grown to a global presence and distributes its products at high quality throughout 60 countries. At the same time, it is the third of three investments in the United Kingdom that Investcorp has made in the last year and a half. The prior two, Nebulas and Impero, specialize in cyber security and online student safety respectively. While at first glance it may seem as though Investcorp is simply diversifying its portfolio to achieve a double its current assets under management, it is equally notable how safe of an approach the private equity firm is taking; willing to pay approximately $20 million more than analysts recommended for Kee Safety, Investcorp is nonetheless acquiring firms with a demonstrated global presence, proof of high quality, and steady profit-stream.
On the other side of the spectrum, the loss of Kee Safety is Dunedin’s third exit of the year. In February 2017, the Group sold Steeper Holdings and just six months later, Blackrock Programme Management. While Dunedin has still grown impressively amidst its active checkbook, the company must realize that it walks a fine line; while it can avoid later losses by buying out of deals after short-term profits, it’s claim that “relationships are fundamentally important to us” becomes less credible with each successive and time-shortening buyout.
Moving forward, Investcorp should look towards regions other than solely the United Kingdom in order to achieve its goals of doubling AUM. While Kee Safety represents a complement to the previous three acquisitions made in the nation, it nonetheless adds a degree of risk when, say, another Brexit happens. In the exact opposite way, in playing hop-scotch with its mergers, Dunedin Capital Group risks losing its credibility as a global, middle-market buyout firm. By default, it seems as though the one that party in this deal that can simply “keep doing what it’s doing” is Kee Safety.