Business Description

SPI Polyols produced polyols - starch derivatives used in food, pharmaceuticals and oral care products. Harrowston acquired 47.5% of SPI in 1994 for an initial investment of US $6.2 million in a leveraged transaction valued at US $75 million.

Investment Thesis

The goal was to expand this orphaned division from a regional focus, into a global company. With increased capital investment, better operating efficiencies, enhanced product development and a focused strategy, SPI could become a world leader. By adding pharmaceutical applications to its confectionery base, the valuation multiple of SPI could also be increased.

Strategic Initiatives

A significant capital program resulted in immediate operating cost savings. A growth strategy based on product leadership, global expansion and operating efficiencies was created. Significant acquisitions added international scope and scale to the business.

Investment Results

In 1998, a strategic buyer purchased the business for $331 million. Harrowston's share, after debt payments, was over $86 million for a gross IRR of more than 73%.

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