ICIG is Looking to Expand its Two Major Platforms
Interview with Achim Riemann, International Chemical Investors Group
Investing in Chemicals - International Chemical Investors Group - better known by the initials ICIG - has become a household name in the chemical industry recently. The privately owned industrial holding company focuses on buying up chemical and pharma assets from companies looking to divest; since its inception in 2005, ICIG has acquired 20 businesses, most recently Germany's AllessaChemie and Clariant's Detergent and Intermediates business unit. When asked about his company's role model within the industry, Managing Director Dr. Achim Riemann said, "Definitely Ineos on the commodity chemical side." Brandi Schuster caught up with him in his Frankfurt office on the company's direction and plans for growth.
CHEManager International: ICIG seems to be in the market for companies with a long-standing history and origins in major global chemical or pharmaceutical corporations. Is this just a coincidence or is it a part of your strategy?
Dr. Achim Riemann: It is definitely a part of our strategy. We deal primarily with large corporations who are looking to sell off assets that are no longer strategic. We were founded in 2005, a time when a lot of change was happening in the chemical industry; back then, companies were particularly interested in divesting fine chemicals assets. Later we moved into pharma, but the principle was the same. Many large companies are unable to fully utilize their assets, and an overriding theme right now is custom manufacturing. In our pharma business, about 70% is CMO for APIs and drug products. We almost always turn down offers from privately owned sellers because that is not our direct focus.
So your focus is on buying up parts of companies who are looking to divest anyway, such as your recent purchase of Clariant's Detergents & Intermediates business unit.
Dr. Achim Riemann: We obviously look for businesses that fit into our two major platforms: WeylChem for non-GMP fine chemicals and intermediates and CordenPharma for pharma. We are interested in anything that fits under those two umbrellas; the assets we buy are typically plants themselves or businesses with plants. The Clariant acquisition, for example, was two plants with a business and a good fit: It's custom manufacturing and includes products that fit into our existing fine chemicals product range.
What about aggressively going after assets rather than waiting for a divestment?
Dr. Achim Riemann: We also go after things we want, and we ask people if they are willing to sell. This usually happens when we have the feeling that an asset is no longer strategic to the potential seller. However, we are usually approached by sellers.
ICIG owns facilities in Europe and in the U.S. Are there any other regions where you'd like to get a foot in the door?
Dr. Achim Riemann: In our Pharma platform Corden, we have assets where Big Pharma is divesting; while we would be interested in plants in India or China, there is simply nothing up for sale there. That's where most of the pharma companies are currently investing in plants.
What trends are influencing how you buy and your overall strategy?
Dr. Achim Riemann: We certainly look at competitiveness, and this has dramatically changed in the fine chemicals area. Within non-GMP fine chemicals, most of the excess capacity has disappeared, particularly in North America. There are not very many players left who can supply agro customers as contract manufacturers, for example. The same holds true for Europe. This area is now well consolidated, and with the increased competitiveness of North America, particularly in light of its low-energy costs and raw-material advantage, we are happy to have a substantial site there. We are also seeing good utilization of our plants in Europe.
What about the cost disadvantage of manufacturing in Western countries?
Dr. Achim Riemann: I am convinced that we have seen the maximum difference in cost competitiveness when comparing Europe to China. The gap is narrowing, and people are now more and more interested in reestablishing supply chains in Europe.
How do you plan to grow these two integrated businesses with the APIs under Corden and the non-GMP fine chemicals under WeylChem?
Dr. Achim Riemann: Our strategy for Corden is to acquire additional sites from Big Pharma. We are currently involved in ongoing discussions with pharma companies regarding API and drug product plants; we are particularly interested in assets that complement our CMO technology base, but we are also interested in adding capacity. For the time being, we are not interested in acquiring a smaller CMO; that is not our focus.
What role does ICIG play after these assets have been purchased?
Dr. Achim Riemann: We typically restructure them; the assets we buy were either neglected or are in areas where there is a high competitive intensity with low margins. We work to create an entrepreneurial spirit within those companies by having a management team that focuses solely on the business and cost structures. Looking at our two bigger platforms, we are also able to generate substantial synergies. However, we are also flexible; we are willing to open up another platform apart from pharma or the non-GMP fine chemicals sector.
Could you be more specific?
Dr. Achim Riemann: There are a few assets on the market that are of interest to us, but I don't want to be more specific than that for now.
What are your company's goals in terms of size and growth?
Dr. Achim Riemann: Looking at WeylChem, it is a top five company worldwide in terms of non-pharma custom manufacturing, which means we have been able to build up a considerable amount of critical mass. This is something we're still working towards for our pharma business; we want to double, if not triple, our business here, getting it into the € 1 billion range in the mid- to long term. Our pharma business is at around € 350 million right now, but there are plenty of opportunities out there, and I am confident that we can reach our goals in due course.