By Matt Griswold
August 21, 2006
Key Principal Partners LLC bought a controlling interest in Laval, Quebec-based vinyl profile extruder Plastival Inc., the private equity firm announced Aug. 15.
Terms were not disclosed.
Plastival is a $37 million manufacturer of vinyl fence and railing products. The company has extrusion facilities in Laval and Elgin, Ill. Its distribution channel includes big-box retailers Lowe’s and Menards in the United States, and Rona in Canada.
“We’re seeing a downturn in housing, so you have to be careful investing in building products,” said Leland Lewis, a Greenwich, Conn.-based managing partner of Key Principal Partners, in an Aug. 15 telephone interview. “We feel, despite that, that this is a well-positioned company with good growth prospects.”
“It’s a growing segment. People like the easy maintenance of using vinyl. And I think the quality and look of the product is getting better and better,” he said. “Plastival has some really good products and a good cost position that we think is defensible in terms of competition from Chinese imports.”
Lewis described Plastival’s manufacturing as lean, and said he doesn’t anticipate any significant changes.
The company is likely to expand its distribution system by opening facilities in the South and West, he said.
Plastival co-founders Guy David and James Quinn will remain with the company, a Key news release said.
Investing in building products will remain a tricky business as the housing market continues to sputter, but Lewis said companies like Plastival are the ones to latch onto.
The fencing industry is growing about 4 percent a year. The use of plastics, predominantly vinyl, in fencing applications is growing by nearly 10 percent a year.
Vinyl makes up about 35-40 percent of the fence market, which is expected to swell to $6.6 billion by 2009.
U.S. families are spending nearly 30 percent of their home-improvement dollars on vinyl, up from about 8 percent in 1990.
“In this phase of building products, you would optimally invest in repair, maintenance and replacement-type products, if possible,” Lewis said. “And when you have a trend like you have in vinyl fence and railing – it’s a growing share of the entire market – that’s a good thing, obviously.”
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