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"We will look for additional acquisition opportunities in the chemical space - both to add to this business, as well as new deals, but we're going to be selective as we look for defensive growth businesses," says Gupta in an interview with ICIS. "We are open to opportunities, given the right fit, growth prospects and value."
Gupta says he will continue to look for chemical deals of a similar size to the latest acquisition.
However, he says his first priority will be to focus on building a strong growth path for Mallinckrodt Baker, a producer of high-purity chemicals for the laboratory, pharmaceutical and microelectronics industries.
The company had sales of $416m in fiscal 2009 (ending September). Products include high-purity solvents such as acetone, as well as salts and acids.
Gupta will serve as nonexecutive chairman of Mallinckrodt Baker, aiding in strategy, acquisitions and recruitment. New Mountain Capital's typical holding period for an investment is between five and 10 years. Its diverse investment portfolio includes companies involved in education, consulting, surgical services, insurance and software.
"New Mountain is a builder of companies that are acquired with conservative financing. That was appealing to me," says Gupta.
"We are open to opportunities, given the right fit, growth prospects and value"Raj Gupta, senior adviser, New Mountain Capital |
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Discussions with the owner, US medical device manufacturer Covidien, began about six months ago, he revealed. "We had plenty of time to do our due diligence and formulate a plan for the company," says Gupta.
New Mountain Capital still has 60% of the $5.1bn raised in its latest round of equity financing available for investment," notes Gupta. "We have lots of dry powder left."
While the high-yield debt market upon which most private equity firms rely for financing is tightening a bit with thelatest financial turmoil, Gupta is not terribly concerned.
"How the European debt crisis will play out is anybody's guess, but there has been amazing speed of action on the part of governments to maintain liquidity. And despite the recent equity market turmoil, good companies will still be able to get financing," says Gupta. "Plus, we look to make deals that are very conservatively financed."
But the number of attractive chemical assets for sale may be somewhat limited. "Plenty of chemical acquisition opportunities were presented to us, but they were not necessarily ones that were appealing," Gupta says. "After having fixed their balance sheets and restructured, chemical companies are now looking to grow - not divest. And if they are looking to divest, it is usually underperforming assets."
