Mark Hauser, Private Equity Investor, Sees Value in the CPG ...| MENAFN.COM

Monday, 05 December 2022 03:40 GMT

Mark Hauser, Private Equity Investor, Sees Value in the CPG Market


(MENAFN- Digital solutions)

Consumer packaged goods may lack the excitement that comes with the highs and lows of other areas such as startups or real estate, but consumer staples are always in demand, and their steady growth makes them a viable option for significant returns. Technology, social consciousness and emerging industries are causing a rapid shift in consumer trends that make for an exciting time in the industry as a whole, but savvy investors have been tapping into the consumer product goods market for years. The demand for consumer goods remains high and even elevated in certain cases, and those who are able to recognize the trends and do their due diligence have seen success in the sector.

One such firm who has been aware of the value consumer product goods companies can add to a portfolio is Hauser Private Equity. Founded by Mark Hauser in 2008 who remains co-managing partner, Hauser Private Equity is a hybrid private equity fund manager based in Cincinnati. The firm focuses on direct co-investments in the lower-middle to the middle-markets, seeking funds that use strategic investment models to add operating leadership to the companies in their portfolio. They often partner with control buyout funds, but other beneficial partners include managers of growth equity and special situation funds. When looking to partner, Hauser Private Equity seeks teams that have a track record of collaborative investing as well as a history of successful exits, and by working with funds that are focused on operations they are able to create clearly defined target strategies and add value to the companies they invest in. Hauser Private Equity also tends to partner with funds that hold no investments in venture capital, real estate or emerging technology.

Predicting the explosive growth of the gaming industry, in 2017 Hauser Private Equity was one of the four investors to acquire a majority stake in Corsair Gaming Inc. A manufacturer of PC components used by gaming enthusiasts who tend to build their own computers, the California-based company was in the number one market position for its product and was well-positioned for continued growth. Alongside EagleTree Capital, the Ontario teachers’ pension fund and Honeywell International Inc.’s pension fund, Mark Hauser indicated that the investment was one of the firm’s bigger deals to have taken place at the time. Thanks in part to the operational, strategic and financial support provided by Hauser Private Equity, Corsair Gaming Inc. raised $238 million in an IPO that saw the company valued at roughly $1.3 billion.

In September of 2021, the Washington, DC-based private equity investment firm, ACON, sold its portfolio company, Igloo, to Dometic’s. Igloo is the United States’ leading cooler manufacturer. Dometic Group AB, the publicly traded Swedish manufacturer of accessories for campers and RVs, signed an agreement to purchase Igloo Products Corp. from ACON Investments for $677 million USD on a cash and debt-free basis under the agreement’s terms. ACON acquired the company in 2014, with co-investment from Hauser Private Equity. Dometic will utilize its internal funds for the transaction.

Examples of Dometic products include multiple sizes of portable refrigerators and wine coolers, and its higher-dollar product spectrum also includes safes and power generation equipment. The Igloo transaction will open up Dometic to a stronger marketing and distribution position relative to the North American market, while also giving it access to the growing lower-ticket outdoor products segment. According to the 2021 North American Camping Report from Kampgrounds of America, the number of United States households that identify as “active campers” grew by a record 3.9 million in 2020, as the relative safety of outdoor activities in light of the coronavirus pandemic caused a surge in interest.

Texas-based Igloo is the global leader in the production of passive cooling boxes, having pioneered the cooler product segment during its launch in 1947. The company claims 92 percent of the United States’ net sales in the sector, and in 2021 over 110,000 retail storefronts worldwide carry the company’s versatile Igloo coolers. Igloo also  manufactures a line of coordinated drinkware items in addition to its diversified cooler products, and collectively has over 500 products it markets to its large consumer base. Thanks to a combination of advising on strategic operations provided by ACON Investments and Hauser Private Equity and the pandemic-fueled increased interest, Igloo reported $401 million USD in net sales for the most recent 12-month cycle, representing an increase of 24 percent over the previous reporting period.

The transaction is expected to close during the fourth quarter of 2021, assuming the execution of regulatory approvals, and no changes are expected to the Igloo family of brands. From an operations perspective, the Dometic-Igloo transaction will create a stronger combined sales platform for both companies. This enhanced sales environment is expected to produce $150 million USD in higher annual sales, and supply chain and distribution enhancements will likely result in cost benefits of $5 million USD annually. Hauser Private Equity’s partner ACON Investments continues to be a leader in the consumer goods market, having also realized its 2017 investment in the American dairy processor and distributor Borden Dairy Co. in 2020 for approximately $340 million.

Another category within the consumer product goods market that has begun growing in popularity has been businesses that cater to health-conscious individuals, such as healthy lifestyle brands, organic food companies and companies that generally market their products as “better-for-you.” Hauser Private Equity invested in the multi-channel branded beverage enterprise Argo Tea. The Chicago-based business specializes in natural, Tea-based signature drinks while also offering loose-leaf Teas, organic coffee and other specialty foods. After water, tea is the second-most consumed beverage in the world, and Argo Tea’s mission of expanding the offerings of this popular drink in the United States aligned with the growing desire amongst consumers for an easily accessible specialty drink that is healthful as well. The investment has since been successfully realized.

Alongside Boston-based Prospect Hill Growth Partners, Hauser Private Equity co-invested in the furniture supplier Walker Edison. Focused exclusively on the e-commerce channel, the furniture is available on a number of large websites including Wayfair and Amazon. The company designs and supplies affordable, ready-to-assemble furniture to consumers, and their extensive logistical network has allowed them to partner with multiple brands seamlessly and offer a wide variety of products with fast shipping to their customers. Since partnering with Prospect Hill Growth Partners in 2018, the company has experienced significant growth through its transition to data-driven results, and in May of 2021 it was announced that funds managed by Blackstone Tactical Opportunities had made a significant minority investment in the business. This partnership is expected to further accelerate growth, as Blackstone brings with it unique offerings in data science, logistics and supply chain that will move the company forward alongside Prospect Hill and Hauser.

As astute institutional investors, Hauser Private Equity has been successful in identifying emerging opportunities in the United States consumer product goods market. In September of 2020, Argand Partners acquired the German computer peripheral-device manufacturer Cherry GmbH with Hauser Private Equity co-investment. The company both designs and manufactures premium key switches for mechanical keyboards, branded gaming peripherals, computer input devices such as mice and headsets in addition to products for security, point-of-sale and e-Health applications. With manufacturing facilities and corporate offices in Europe, Asia and North America, Cherry operates on a global scale and as of late has had its growth potential further accelerated by the ongoing digitization of healthcare, “stay-at-home” social policies and corporate trends of working from home.

Seeking to capitalize on these trends, Argand Partners has worked to support Cherry’s efforts to expand its e-Health offering across Europe and into North America through strategic acquisitions. The company first acquired the software company Theobroma, and in May of 2021 acquired Active Key GMbH, a leading manufacturer of hygienic, washable keyboards and mice for medical and industrial-end markets. Based in Germany, the company is a leading brand in the development and engineering of specialist keyboards and mice that are used in medical, industrial, point of sale and office settings, creating innovative products such as keyboards that are resistant to dust and moisture, fully sealed keyboards that can be easily sanitized, programmable keyboards and keyboards with integrated card readers. Consumer demand for hygienic and washable computer peripherals has increased significantly in light of the coronavirus pandemic, and by applying the technology of Active Key with Cherry’s broader product portfolio the company can create much-needed solutions in a time of heightened awareness as to the importance of proper hygienic practices when it comes to preventing the spread of infectious diseases.

From the outdoor market to computer peripherals, the landscape of the consumer product goods market is hardly one that is made up exclusively of stagnation or slow gains. Indeed, while it may not have the flashiness of sectors such as tech startups or real estate, consumer product goods is a robust market that has the potential for investor success when approached strategically and by seasoned leaders in the private equity sector such as Hauser Private Equity.


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