ANGUS Chemical aims high on back of product portfolio
By: Chemical Week
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Nitroalkanes and derivatives maker ANGUS Chemical (Buffalo Grove, IL) has ambitious growth plans now that it has separated from Dow Chemical. Dow finalized the sale of ANGUS in February as part of a $1.4-billion package of divestitures that also includes the company’s sodium borohydride business. The sodium borohydride business was sold to Vertellus Specialties (Indianapolis), and ANGUS was sold to private equity firm Golden Gate Capital (San Francisco). ANGUS, a $500-million/year company with 300 employees, is aiming to double in size within the next five years, says president and CEO Mark Henning.
Dow bought ANGUS, a 70-year old company, in 1999. The company’s name is an acronym for Alberta Natural Gas US—which owned it at one time—although it neither produces natural gas nor has operations in Alberta. ANGUS was started in the 1940s based on a 1934 patent issued to three scientists at Purdue University for the nitration of propane, Henning says. The nitoralkanes that ANGUS sells were originally used as a solvent, however, today ANGUS mostly sells downstream derivatives of nitroalkanes and has a very small solvents business, says David Green, v.p./R&D.
The specific properties of those derivatives are the keys to ANGUS’s growth plans. The company sells intermediates into the pharmaceutical and agricultural chemical spaces and additives into personal-care, paints and coatings, metal-working fluids, life sciences, and other specialty markets. “We are looking to expand our product penetration into existing markets,” Green says. “For example, in personal care, we can add functionality and replace chemicals that are being regulated out of formulations.”
Many of ANGUS’s products have strong environmental, health, and safety (EH&S) profiles, Henning says. The company’s nitroalkane derivatives can replace triethylamine—a chemical that comes under fire from consumer groups—in personal-care products, he adds. The European Union’s cosmetics directive restricts secondary or nitrous amines, which has caused personal-care companies to look for alternatives, including products manufactured by ANGUS, according to Henning.
One ANGUS product with a strong EH&S profile and solid market potential is AMP, an amino alcohol used as an additive in personal-care products and paints. The material has proved popular in premium coating formulations as a neutralizing amine with added functionality as a codispersant with better color fastness and stability than competing materials, such as ammonia and caustic soda, Henning says.
EPA last year granted AMP an exemption from volatile organic compound (VOC) regulations. ANGUS applied for the exemption as premium paint brands moved from low VOC to zero VOC, and the company saw it could lose share. “To drive down to zero VOC, [paint formulators] had to start considering taking AMP out,” Henning says. Competing materials ammonia and caustic have odor and scrub resistance issues, respectively, Green says. A new process developed to measure ground-level ozone—which VOCs ultimately exist to control—presented an opportunity to obtain an exemption for the ingredient.
Customers were eager to support the exemption. “Three of our largest paint customers in the US provided EPA with letters of support for the exemption,” Henning says. “They know that AMP is a valuable formulation tool and knew they would lose it in zero-VOC paints if we didn’t gain the exemption.” Ultimately, ANGUS was confident that AMP would meet the standard for noncontribution to ground-level ozone, gaining it an exemption from VOC rules, which it did in July 2014.
Exemption in hand, AMP’s “market opportunity is … exceedingly large,” Henning says. “We have below 25% market penetration in paints, so we see big upside.” The product has higher penetration in personal care, especially in hair fixatives, such as hair spray, he adds. The VOC exemption also makes AMP attractive to formulators of metalworking fluids. The exemption “opens up opportunities … relating to customers preferring to have materials with a much more sustainable environmental profile,” Henning says.
These advantages mean ANGUS aims to grow largely by increasing its market penetration and by introducing new molecules. The company’s R&D process can make an idea into a saleable product in 18 months in an already-established process, according to Henning. “In the last 10 years, we have introduced 10 new-to-the world molecules in our markets,” he adds. Some market uplift will help, too. “The paints market is picking back up, and personal care is chugging along nicely,” Henning says. “Life science is finding its own. It’s starting to deliver high single-digit, double-digit growth.”
En route to doubling in size, ANGUS is also aiming for double-digit annual growth. “We are aiming for double-digit top-line growth because that is the strongest driver to greater than double-digit bottom-line growth,” Henning says. “We need to see it because of the leveraged debt we took on with Golden Gate. Those two measures are critical.” Market uplift and new products will be a part of that story, but room for growth in new products is the most important element. “We know we have room to grow there, with the VOC exemption and the EH&S performance giving us uplift beyond market growth rates in some parts of the world,” Henning says.
One strategy that is unlikely to play a big part in ANGUS’s growth is acquisitions. “It’s really about organic growth for us,” Henning says. “Incremental capacity and expansion projects will put us in a position to double our overall business.”
About ANGUS Chemical Company
ANGUS Chemical Company (“ANGUS”) is a specialty and fine chemical company dedicated to the development of novel chemistry that helps customers deliver enhanced product and process performance. ANGUS is committed to constantly improving products and services by mastering science and technology. The company innovates through its unique nitroalkane chemistry, which harbors the reactivity to create complex molecules for use in a wide variety of applications. The innate characteristics of this chemistry enable multifunctional additives which improve performance, reduce reaction steps and cut synthesis costs.
About Golden Gate Capital
Golden Gate Capital is a San Francisco-based private equity investment firm with approximately $12 billion of capital under management. Golden Gate Capital is dedicated to partnering with world-class management teams to invest in change-intensive, growth businesses. The firm targets investments where there is a demonstrable opportunity to significantly enhance a company’s value. The principals of Golden Gate Capital have a long and successful history of investing with management partners across a wide range of industries and transaction types. Other notable mining and industrials investments sponsored by Golden Gate Capital include US Silica, EP Minerals, ArrMaz, Humanetics Innovative Solutions, Springs Window Fashions, Canada Fluorspar Inc. and Atrium Windows. For more information, visit www.goldengatecap.com.
Media for ANGUS Chemical Company:
Scott C. Johnson
Media for Golden Gate Capital:
Sard Verbinnen & Co
Nathaniel Garnick / Jenny Gore
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