Onshoring trends to North America, the desire to revamp aging infrastructure and the general growing work-safety culture are some of the drivers spurring demand for safety products and opening opportunities for private equity investments, said Derek Lim, Partners Group managing director.
Partners Group earlier this week acquired SureWerx from The Riverside Company. SureWerx is a Vancouver- and Chicago-headquartered supplier of technical safety equipment and safety tools that help improve employee well-being.
SureWerx owns 18 safety brands across 27 product categories such as head protection for welding, safety footwear and traction aids, arc flash apparel, detectable warning equipment, and abrasive and cutting tools that serve diverse end-markets, including infrastructure and utilities, manufacturing, transportation and logistics, and warehousing.
Lim told PE Hub that there is a strong demand for safety products that underpins their investment. As the pandemic wrecked the supply chain, some companies are now onshoring manufacturing to North America where protective products are needed.
“We are seeing a lot of onshore of American manufacturing, which is obviously going to benefit this business,” Lim said. The warehousing and logistics sector, which is part of the supply chain, is also seeing growing demand for work safety products, according to Lim.
Apart from onshoring trends, Lim said that Partners’ Group noted a growth trend in the safety products market from the proliferation of safety culture at some businesses, product innovation and increased awareness in workplaces.
“We were attracted to the area, and it had clearly exhibited some pretty strong growth,” Lim said.
The Occupational Safety and Health Administration (OSHA) regulations and other federal mandates linked to workers’ safety are other factors that are driving demand for safety products, according to Lim.
Even though the deal comes in a tight macroeconomic environment that may dampen demand, Lim believes the diverse nature of SureWerx products works in the company’s favor.
“The products are used in a number of different applications which span a number of different industries and markets,” he remarked, adding that SureWerx benefits from strong recurring demand as clients restock.
As the country gears towards revamping its infrastructure, supported by the Bipartisan Infrastructure Law, demand for SureWerx products will likely grow, Lim pointed out.
Lim said SureWerx, which will be led by its current chief executive Chris Baby, will pursue growth by both organic and inorganic means. He described the sector as highly fragmented and M&A will serve both to introduce new products and add new geography, including in Europe.
Lim said some sectors are still in the early innings of the adoption curve in terms of promoting work safety, hence presenting a growth market ahead. “The future is bright,” he added.