Private Equity Industrials Sector Fund Managers – October 2015

by Simon Li

  • 05 Oct 2015
  • PE

Concerns over the global economy, fuelled by the turbulent situation in China and the emerging markets, are painting a pessimistic picture for the industrials sector. As per the July reports from the US Federal Reserve, the business environment for the US industrials sector was challenging in Q2 2015; industrial production in the US for the second quarter declined 1.4% year-on-year. This represents a shift from the gradual strengthening of the sector subsequent to the financial crisis and the global recession that followed.

According to Preqin’s Funds in Market database, 126 funds with the industrials sector as a core industry focus closed in the period 2010 to 2015 YTD, raising a total of $46bn. Furthermore, the database shows that there have been an additional 883 funds closing in the same time period with at least a partial preference for investing in the industrials sector. Some of the more common subsectors that Preqin considers to be part of the industrials sector include distribution, transportation, manufacturing, construction, engineering, armaments, intellectual property, defence, aerospace, logistics, and shipping.

Despite the increase in outsourcing of manufacturing by Western nations over recent decades, US-based private equity firms top the list in terms of number of funds closed focusing on the industrials sector. As seen in the chart above, in the period from 2010 to present, 60% of the funds closed with industrials as a core industry focus have been raised by US-based managers. Another 10% of managers are located in China, with the remainder distributed evenly throughout Europe, Asia and Africa. The US-based fund managers have raised an aggregate $30bn via 76 industrial-focused funds – 53 of these funds focus solely on investing domestically. All 13 funds raised by China-based managers focus solely on investing in China, with these funds collecting an aggregate $7.3bn for investment.

According to Preqin, there are 42 funds that are currently in market and seeking capital with the industrials sector as a core industry focus. The largest of these funds is American Industrial Partners Capital Fund VI, with a target of $1.5bn. AIPCF VI seeks to invest in North America-based industrial companies that are underperforming and have sales ranging from $100mn to $500mn.

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