APLA ´07: Chemical sector ripe for equity funds

Source: ICIS News

2007/11/20

BUENOS AIRES (ICIS news)--The chemical sector remains an attractive field for investment due to stable cash flows and the ability that investors have to trade assets, a bank official said on Tuesday.

Producers have invested heavily in recent years and, in some cases, are having difficulty making a return on their investments, said Alasdair Nisbet, managing director of the advisory bank Lazard.

“They are selling new facilities without a significant premium on their investments,” Nisbet said.

Private-equity funds have invested $127bn (€86bn) in the chemical sector in the last 10 years, and the trend is expected to continue.

Hedge funds are also interested in the chemical sector, Nisbet said. Many companies are saddled with mezzanine debt and are considered cheap investments for funds.

“The chemical industry lends itself to hedge funds,” he said, referring to the propensity of the funds to invest in stressed and distressed companies, only later to urge them to sell when business improves.

Nisbet spoke at the closing of the Latin American Petrochemical Association (APLA) conference in Buenos Aires.

($1.00 = €0.68)