CDH bets on Aver Asia's diversity

This is CDH's third investment in the region and Escamillo Lin, a director with the firm, sees reference points in previous transactions. "We are tapping into expertise we have developed from our investments in Indonesia and in China. Ever Asia is in the business of renting out equipment. It is not unlike Hertz, which rents out vehicles - and we have a car rental business in China called eHi - or Apexindo in Indonesia, which rents out drilling equipment to the oil and gas sector."

The private equity firm has committed an undisclosed sum to Aver Asia, becoming the first external investor in the family-owned business, and it will support continued regional expansion. Headquartered in Singapore and with branch offices in Malaysia, Indonesia and Myanmar, the company has built up a 2,000-strong customer base across Southeast Asia.

Equipment rental worldwide is a fragmented industry - global leader United Rentals has a market capitalization of more than $8.5 billion yet an estimated market share of around 14% - although Lin is reluctant to cast Aver Asia in the role of regional consolidator. "As a PE fund we have the resources and ability to undertake all expansion possibilities, including inorganic expansion," he says.

Founded in 1999 by P.K. Ang, who remains CEO, Aver Asia has seen rapid growth. Annual revenue has increased from approximately S$20 million ($14.6 million) in 2008 to S$70-80 million in 2013, and it was projected to hit S$100 million last year. This has been underpinned by a conscious effort at diversification.

The company started out serving the shipping industry. When Singapore emerged as the leading offshore rig builder in the world, Aver Asia duly developed a customer base in the energy sector. Now electricity generator sets used to provide remote power, air compressors required for hydraulic tools, and aerial lifts represent that company's three largest product groups. But the full product range is broad, and so is the customer base.

Escamillo draws comparisons between Aver Asia and United Rentals, which also has broad sector coverage, and contrasts the business with Coates Hire, an Australia-based equipment provider that has a strong focus on the mining industry.

"We do have customers in the oil and gas segment - there are companies that operate offshore rigs sometimes and take our generators and lifts," says Escamillo. "But that same equipment could easily be used in shopping malls or by the organizers of Formula One. "They have tried to build a diverse portfolio that is not tied to a particular sector."

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Southeast Asia
• Infrastructure
• Expansion
• Investments
• Greater China
• shipping
• Southeast Asia
• Infrastructure
• energy
• CDH Investments Management
• China