Clearlake doubles down on Alkegen following TAS divesture

Clearlake Capital Group is doubling down on Alkegen, its portfolio company focused on high-performance specialty materials that are used in energy storage, filtration, fire protection and high-temperature insulation, senior executives at the Santa Monica private equity firm told PE Hub.

Alkegen last week agreed to sell its Thermal Acoustical Solutions (TAS) business unit to Regent, a private equity firm based in Beverly Hills, California. PE Hub caught up with Colin Leonard, partner at Clearlake, and principal Nate Mejías, who explained that the divestiture was meant to allow Alkegen to focus on its core business.

“TAS was underinvested under Lydall when it was public, and the Alkegen team did a great job improving the business. For us, it’s not a fit with the advanced technologies we are developing, so it was a natural opportunity to sell something non-strategic to the future of the platform,” said Mejías.

Formerly Unifrax, Alkegen acquired TAS as part of the Lydall acquisition in October 2021. The company rebranded in January 2022, and changed its name from Unifrax to Alkegen and also moved its corporate headquarters from Tonawanda, New York, to Dallas.

Alkegen has a variety of products meant to save energy, reduce pollution, and improve safety. The company has 75 manufacturing facilities operating in 12 countries and employs more than 9,000 employees globally.

Among its innovations, Alkegen developed a Silicon Fiber Anode Battery Technology (SiFab), that makes batteries for electric vehicles and cellphones, among others, to significantly store more energy per unit size. This technology will help cut down on the number of times people need to charge their batteries, said Mejías.

“This is kind of game changing stuff,” he said. “It needs to be validated by customers and that process can take years, but if this takes off like we expect it to – it’s going to be transformational for the business.”

Alkegen has other products meant for gas filtration or liquid filtration, among others, which are more efficient than other traditional products, Mejías said. “Our biggest strategic focus has been tripling down on innovation,” he said, adding that the world is focusing more on innovative technologies that focus on sustainability and human health, products that reduce fossil fuel consumption, conserve energy usage, decrease pollution and keep people safe.

“That’s where the world economy is going and that’s what everybody is focused on. This is kind of unique in that it’s a business that was ESG before ‘ESG’ really became front and center… and that really attracted us to the platform,” he said.

Among Clearlake’s strengths, Mejías said it’s the firm’s hands-on approach to investing: “We spend a lot of time in the technology and industrial sectors, where we get to know all the players, the assets and management teams. So when we have an opportunity to invest in them, we are not catching up, and we already know where we want to focus.”

As Alkegen is ramping up its business, concerns are growing regarding the current macroeconomic situation. Clearlake says it focuses on assets that could do well if the market were to get choppy.

“The company’s new products should accelerate new business wins and augment the growth of Alkegen’s existing base business, which is already poised to grow in the mid- to high-single digits through the cycle, despite a tougher economic backdrop,” said Leonard. “We believe we will capture  opportunities because some of our peers and competitors are likely to pull back while we will push ahead on attractive expansion projects.”