A leading market position and expansion opportunities created an attractive investment

*This content is sponsored by RMB, a diversified financial services brand encompassing investment banking, fund management, private wealth management and advisory services.

By Pearl Tsotetsi*

RMB Ventures, a subsidiary of FirstRand Limited, together with sister private equity company RMB Corvest, a BEE partner, private equity company the Mineworkers’ Investors Company (MIC), and management successfully finalised the complete buy-out of Universal Industries Corporation (Universal).

RMB’s Pearl Tsotetsi

Universal is a leading South African manufacturer and distributor of commercial food preparation and storage equipment to the food retail, restaurants, quick service restaurants  and hospitality industries.  The group consists of eight separate market leading businesses supplying both long-term and relatively shorter life capital equipment to the defensive food services sector both in South Africa and the rest of Africa. Its product range includes refrigerated and hot display cases, commercial ovens, commercial kitchen appliances, kitchen utensils and industrial cookware.

The businesses across the group export to over 65 countries across the world, with a concentration in sub-Saharan Africa. Exports currently account for about 25% of the group’s turnover. Recent investments in Nigeria and Kenya provide the platform for continued growth in West and East Africa.

The business has an excellent management team and two of the three founders remain materially invested and actively engaged in the business. The founders and management team have a track record of growing the business both organically and through value accretive acquisitions. The business has grown organically by adding different and complementary products or adding different brands to its existing offering. Acquisitions have played an important role in the group’s history with five of the group’s businesses acquired in the last six years.

The group distinguishes itself through significant scale, established distribution networks, a diverse product range, manufacturing capacity and its ability to customise products to customers’ requirements.

RMB Ventures’ investment criteria involve identifying and investing in established businesses with leading or unique market positions and a proven ability to generate cash flow. Its investment philosophy centres on backing strong management teams with a proven track record. RMB Ventures looks at companies across all sectors except for primary mining and primary agriculture.

Universal met the above criteria and has further attractive characteristics to RMB Ventures such as its meaningful presence outside South Africa, the defensive end markets its serves as well as management’s demonstrated ability to continue to grow the business both organically and through value accretive acquisitions.

RMB Ventures does not get involved in the day-to-day operations of the business but rather takes a keen interest in its strategic direction which is achieved through participation on the board of directors and various operating committees. RMB Ventures acts as a sounding board for management as well as assisting management in  key decisions including mergers and acquisitions, optimising capital structure of the business, succession planning and implementing appropriate incentive schemes, to name a few. Its typical investment horizon is five to seven years though this time period is flexible due to RMB Ventures being an on-balance sheet investor.

*Pearl Tsotetsi is a private equity transactor at RMB Ventures

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