CapVest, a US$4.3 billion, London-based private equity firm, agreed to acquire Karro Food Group – one of the UK’s leading meat processors and pig farmers from private equity firm Endless for €209 million (US$226 million).
Endless acquired Karro Group in January 2013 from Dutch food group, VION, at a point when the company was struggling. In the ensuing years, Endless, together with Karro’s management team, have turned the company around to become an industry leader, posting annual turnover of more than £500 million (US$623 million).
“Karro Foods Group has established a leading position in the process and sale of British pork, for which we believe the long-term fundamentals are very strong,” said Jason Rodrigues, managing director with CapVest.
Headquartered in Malton, North Yorkshire, Karro has seven facility locations across the UK employing 3,000 people. The group’s processing site located in Malton is one of the few pig processing plants in the UK that is approved to export to both the U.S. and Chinese markets, and carries a license from the U.S. Department of Agriculture (USDA), according to the company website.
Karro’s Cookstown site is a major player in the agriculture sector of Northern Ireland, and one of the largest pig processing plants in the UK and Ireland. Every year the facility processes 1.2 million pigs from which its pork products are exported to markets across Europe, and to Africa, the U.S., and Asia.
Other Karro facilities include its Haverhill site which produces cured and uncured meats; Hull, which produces frozen, value-added pork, chicken and beef products; and Scunthorpe, which is a bacon and gammon slicing facility.
Karro is also a major UK pig farmer with farms located in Brydock, Scotland, where it raises pigs across a range of welfare classes: Indoor and Outdoor Bred, Outdoor Reared, Freedom Food, and Antibiotic Free, as well as contracting with local pig farmers. At its Brydock site, Karro has 10,500 outdoor sows and produces 4,600 high-welfare pigs per week.
Under the terms of the deal, which remains subject to approval from the Competition and Consumer Protection Commission, Karro’s management team, including Di Walker, the executive chair, will remain in place with the business after completion of the transaction.
“Karro is a great fit with CapVest’s overall investment strategy,” said Rodrigues. “We are delighted to back a very experienced and capable management team and we look forward to working closely with them in pursuing exciting, new organic and acquisition-led growth opportunities.”
Although pork consumption across Europe showed a period of decline between 2011 and 2013, consumption throughout 2014 and 2015 rebounded, with per capita consumption reaching 40.9 kilograms per person in 2015, according to the UK levy board AHDB Pork.
And although this is a trend in the right direction for Karro, it is demand in Asia that drives the bus. Pork prices in China reached a record US$2.99 per kilogram last year due to a government crackdown on non-modernized farms and a shrinking domestic herd, reports Global Meat News. Indeed, Rabobank predicted that China’s pork imports would surpass 2 million tons last year, with more record-level imports being seen in the near future.
Founded in 1999, CapVest is a mid-market private equity firm focused on investments in companies that supply essential products or services not correlated to discretionary demand. Leveraging its financial and managerial experience, CapVest works with the management teams for each of its investments to identify both organic and acquisition-led growth opportunities that will expand the size and scale of each of its portfolio companies.
Through this strategy, the firm has completed over 150 transactions across continental Europe, Scandinavia, the UK, Ireland, and North America, and has raised over €4 billion (US$5 billion).
-Lynda Kiernan
Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration please contact Ms. Kiernan at lkiernan@globalaginvesting.com.