The industrial sector in the US creates significant value and has become more important due to factors like onshoring and supply chain disruptions.
Fernway Group and One Rock Capital Partners follow consistent investment strategies of buying well-positioned businesses at a discount, addressing challenges like inflation and labor shortages, and prioritizing long-term value creation.
Both Fernway Group and One Rock Capital Partners prioritize ESG considerations, believe in addressing climate change, and have integrated ESG into their investment and value proposition.
Deep dives
Investment Strategies and Value Creation
Fernway Group follows an Engaged Investor Operator Model (EIOOM) in the industrial and industrial tech sectors, leveraging operational and transformational expertise to drive growth and create value. One Rock Capital Partners focuses on buyouts in the real economy sectors, aiming to buy companies at low valuations, fix problems, and sell them at higher valuations. They have a team of 90 people, including operating partners, and prioritize deal areas like corporate carve-outs.
Industrial Sector Resilience and Awareness
The industrial sector is often misunderstood and undervalued, but both guests believe it creates significant value. The sector's importance has increased, especially due to factors like onshoring and the need for more manufacturing and industrial production in the US. Supply chain disruptions and geopolitical tensions have also highlighted the value of local solutions and shortened supply chains for customers.
Staying the Course in Investment Strategies
Both firms, Fernway Group and One Rock Capital Partners, maintain a consistent investment strategy. They focus on well-positioned businesses, fix problems, and buy at a discount to fully priced valuations. They adapt and address challenges like inflation, labor shortages, and higher interest rates. They emphasize long-term value creation, leveraging domain expertise, and staying agile to meet customer demands.
ESG and Climate Considerations
Both firms prioritize ESG considerations and believe that addressing climate change is essential, even in carbon-intensive industries. One Rock has a robust ESG process, screens investments, measures carbon emissions, and uses ESG as part of their value proposition to customers. They align with the goals of achieving commercial success while reducing carbon intensity.
Outlook for the Future
While a recession is uncertain, both firms remain confident in the economy's resilience. They anticipate a continued flow of M&A deals and responsible growth. Fernway Group is focused on expansion, hiring, and investment, while One Rock emphasizes nimbleness, in-house operating expertise, and the ability to react quickly to outside shocks and opportunities.
On BDO’s new Private Equity PErspectives podcast episode, Nick Santhanam, CEO of Fernweh Group, and Scott Spielvogel, co-founder and managing partner of One Rock Capital Partners, join host Todd Kinney to discuss:
Investment strategies: How the changing market has evolved the way fund managers are investing (or not)
Impact of current economy: How inflation and higher interest rates are affecting the approach to value creation and financing
Influence of social and environmental concerns: How the pressures of social equity and climate-related demand are influencing human capital and investment decision making
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