The Alchemy of Private Equity: Value Curation in the Chemicals Business

How can investment bankers achieve better results in the chemicals business than chemical engineers and chemists do? No, it isn’t black magic. Indeed, many people in the industry have been bemused by the steady growth of investments by private equity (PE) firms in the business of chemistry. How, they wonder, can investment bankers with no knowledge of engineering or chemicals, and with plans that seem to ignore industry value chain logic and strategic synergies, succeed as owners of these operations? But succeed they do.

This discussion focuses on how PE players manage to curate – not just create – better value in the business of chemistry. How value curation in the PE operating model is about co-creation of “more from less” through a committed top management team vested in the art of strategic investments for value-creating growth while leveraging the power of their portfolio strategy through careful selection of markets with differentiated offerings in a world of material excess and virtual access. Thus, value curation rightly shifts the focus from volume to value by cutting things down to what really matters to customers across the chemical value chains, and what customer segments may even be willing to pay handsome premiums.