Creador makes second SE Asia food investment in five months
07.03.22 / Author: Justin Niessner
Malaysia-based Creador has acquired a significant minority stake in local food industry supplier Custom Food Ingredients for an undisclosed sum as part of a category platform play.
It is the middle-market private equity firm’s second deal in this space in the past five months, including Orion Food Industries, a Malaysia-based seasoning, coatings, and marinades specialist. Both companies are part of Creador’s new Savourés Group platform, which acquires Southeast Asia ingredients players and enhances their positioning as end- to-end suppliers for global clients.
Active in the cereal and malt-related additives industry since 1992, Custom Food is Malaysia’s oldest high-fat powder manufacturer and a lipid-based ingredients supplier for more than 200 clients in 30 countries. It claims to be one of the few players in this space capable of customising powder qualities to suit customers’ exact nutritional or regulatory requirements.
The company’s key differentiator is a spray drying system that allows it to produce lipid powder with up to 80% fat content, an otherwise unattainable ratio through conventional drying methods. The technology also enables the production of semi-agglomerated powder with greater fluidity and solubility, which is said to translate into better final product quality.
A strong focus on sustainability and corporate citizenship is part of the offering. Operations are primarily powered by natural gas systems said to produce only carbon dioxide and water as by-products. The company also has its own water treatment plant, opting for more energy-efficient equipment and engaging only suppliers with similar green policies.
The plan is to expand into new segments, including ingredients for special medical purposes. “Our investment allows us to support their next stage of growth, including investing in manufacturing, research & development, marketing as well as building a bench strength of food-tech professionals,” Creador founder and CEO Brahmal Vasudevan said in a statement.
Creador closed its fifth fund earlier this year at the hard cap of USD 680m and a remit to write cheques of USD 40-60m. The fund has already been active in the food sector, having backed Indian fast-food franchisee operator Sapphire Foods, which was divested within three months in a USD 277m domestic IPO that doubled expectations for an exit valuation. The firm’s consumer strategy has historically focused on end customer-facing models, but this is shifting further upstream. “Malaysia is a manufacturing hub, but we’re not going after the low-margin commoditised products,” Livia Chan, Creador’s head of Malaysia investments, told AVCJ in February. “We’re going after high value-added, high-margin areas that are sticky with customers.”