Last month, specialized private equity firm SFW Capital Partners announced the addition of Terry Kelly as an Operating Partner. Mr. Kelly is the former president of TA Instruments, part of Waters and a leader in analytical instrumentation for materials characterization technologies, such as microcalorimetry, rheology and thermal analysis. He was also a member of the Board of the Executive Committee at Waters.
Since its founding in 2007, SFW has completed 18 investments and committed over $800 million in capital. According to the company, SFW invests in firms that help streamline efficiency in other businesses, such as hardware and software, informatics, and services and consumables firms. Sectors that SFW focuses on include test and measurement equipment, lab and field instruments, lab products and automation, and consumables and reagents, in numerous end-markets such as diagnostics, academia, biopharma, energy, and food and agriculture.
In 2015, SFW closed a $345 million analytical tools fund, which is still active with ample available liquidity, according to Ahmad Sheikh, partner at SFW. “We remain committed to our industry focus and our desire to form partnerships with founders, owners and management teams,” he said, adding that SFW is “quite selective” in what companies it chooses to partner with. “We continue to look for well-positioned, attractive companies providing analytical solutions, including instrumentation, sensors and measurement devices, laboratory equipment and consumables.”
While SFW has recently been investing in information and software companies, the private equity firm has a notable presence in the analytical instrumentation industry as well, with SFW principals having made past successful investments in Mettler-Toledo and Waters, and, more recently, Essen Bioscience. After acquiring it in 2011, SFW sold Spectro Scientific, an oil and fuel machine condition monitoring firm with diverse materials characterization offerings, to AMETEK last year (see SFW Capital Partners Announces Sale of Spectro Scientific to AMETEK).
The addition of Mr. Kelly, an expert in materials characterization instrumentation, points to SFW’s focus on companies in the field, as Mr. Sheikh indicated. “We are actively looking for analytical/lab tool companies, with materials characterization being one specific area of interest,” he said. “Terry will be working closely with the investment team at SFW to identify, evaluate and support new platform investment opportunities as a co-investor, advisor, and active board member or executive.”
“The [materials characterization market] is still fragmented, and innovation is not restricted to just the larger, global instrumentation companies.”
SFW’s strategic investments in the materials characterization sector point to the growth of the field, as demand for high-performance measurements in materials characterization systems is prevalent worldwide. “Scientists in labs, like everyone else, are challenged to be faster and more productive,” Mr. Kelly remarked. “These scientists are actively looking for high-performance measurements in systems that are easy to use, robust, automated and intelligent.” As Mr. Kelly explained, materials characterization technologies address the needs of diverse end-markets, which is helping drive their demand. “Investments in new high-performance materials are happening everywhere, including in end-markets such as energy, electronics and technology, aerospace and defense, medical devices, consumer products, automotive, polymers, packaging and more,” he noted.
Mr. Kelly was president of TA Instruments for 14 years and was a driving force in increasing the company’s value, helping grow the business’ revenues from $100 million to $280 million during his tenure. He also played key roles in the company’s R&D, sales and service, and 13 global strategic acquisitions. “At TA, we served a wide range of end-markets around the world, driving growth through organic developments and more than a dozen complementary acquisitions,” said Mr. Kelly. “The portion of the analytical instruments market focused on materials characterization is still fragmented, and innovation is not restricted to just the larger, global instrumentation companies.”
With Mr. Kelly in tow, SFW is focusing on strategic plans and roadmaps to accelerate revenue growth over the next decade. This includes optimizing new product development capabilities, as well concentrating on profits and enterprise value propelled by several products, geographical regions and customer segments. The fragmented materials characterization instrumentation market provides prospects not only for SFW, but also for companies of all sizes that are developing technologies in the field. As Mr. Kelly stated, “There are a lot of opportunities to apply SFW’s capital and expertise at smaller and mid-sized companies [in the materials characterization field] to drive growth.”