Private equity to back manufacturing?

Analysis by Peter Roberts

The Australian Financial Review has an extraordinarily tantalising piece of gossip today which, if confirmed, will mark a milestone for private equity investment in manufacturing.

Normally PE suppliers take positions in manufacturers under strain, only to onsell the businesses after stripping them of assets and offshoring operations.

Few genuine PE investments aiming to fundamentally improve a business ever happen in a depressing process which has sapped the sector of strength.

Now AFR reports in its Street Talk column that Champ private equity is about to take a majority stake in Melbourne automotive and defence engineering business, Marand.

Founded by Andy Ellul and run by his son David, Marand is a terrific business that has seriously reinvented itself by diversifying from automotive.

The company now has key roles in ultra high technology projects such as the F-35 Lightning jet fighter.

Customers include Lockheed Martin, Boeing, BAE Systems, BHP and Rio Tinto.

Champ is an ethical company with a strong track record in building businesses, and its support for a manufacturer with prospects such as Marand would be a tremendous boost for the whole sector.

Instead of being seen as a victim, manufacturing may just be viewed again as an investment opportunity.

Only good can come of this – all credit to the Elluls.

Picture: Defence/F-35

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