ShawKwei’s acquisition of Singapore-listed YongLe Tape in 2007 is a strong example of its targeted investment strategy of purchasing traditional industrial businesses and pursuing operational efficiencies in action.
Previously known as CHT Holdings, the company was a manufacturer and distributer of PVC adhesive tape products to auto manufacturers, the electronics industry and retailers.
ShawKwei introduced a number of strategic improvements to the business. These included consolidating the existing 14 small manufacturing facilities located near Beijing and Shanghai into a single new custom-built 880,000 sq. ft. mega-factory. ShawKwei also upgraded manufacturing equipment that improved efficiency in the factories, reduced production line times by a third and increased production output per line by 30 percent. In addition, a state-of-the-art solvency recycling system was installed, which significantly improved recycling of chemicals from 65 percent to over 99 percent. This equipment upgrade reduced the amount of new chemicals needed and significantly lowered the plant’s environmental impact.
The company also expanded into higher value, more complex products, including cloth tape for the European market for companies such as Daimler and Volkswagen and low volatile organic compounds tape for the Japan market.
ShawKwei removed the four different names it operated under and rebranded and consolidated the company under the “YongLe” brand. It also introduced enterprise resource planning protocols at YongLe, refocused marketing and made improvements to the sales team.
In 2017, Shaw Kwei & Partners completed its exit from YongLe, securing a gross multiple of 4.8x, after Avery Dennison purchased the asset for a total of $300 million. ShawKwei originally acquired and privatized YongLe in a deal worth $63 million.