Blog: McCain, Sobey families join forces
Katy Askew | 27 March 2012
Two of Canada's premier business clans, the McCains and the Sobeys, have joined forces to form SeaFort Capital, a new private-equity investment vehicle.
Scott McCain, COO of Maple Leaf Foods and the son of the late Wallace McCain who co-founded another Canadian food giant,McCain Foods, will sit on the board of the new venture brushing elbows with Donald Sobey, who helped build the Sobeys grocery chain, and his son Rob Sobey, who also sits on the retailer's board and is the chief executive of Lawton's Drug Stores.
According to its website, the new investment firm will target "old economy" businesses with earnings of between C$2m (US$2m) and C$10m.
"Our preference is for companies that have a strong tangible asset base," the company said.
Canadian reports have suggested the firm will target family-owned companies in smaller cities and towns across Canada, in particular providing an alternative for entrepreneurs preparing to retire without anyone to hand their businesses on to.
With the strong grounding that some of its most high-profile investors have in the food and retail sectors, it seems likely then that we could see SeaFort increasing the level of private-equity activity in this sector.
However, perhaps this represents a drop in the ocean. According Tom Lindsay, co-founder of M&A advisors Spayne Lindsay, international M&A activity in the food sector is likely to be driven by higher levels of PE investment in the coming months.
Speaking during the Consumer Analyst Group Europe conference in London, where just-food was the exclusive media partner, Lindsay explained the appeal of food companies to private-equity investors.
"Food companies do have relatively stable cash flows, even though they are relatively low growth at the top line level, they can be made to grow at the bottom line level through cost savings, consolidation synergies and improved focus. And there's plenty of capital in the private-equity world," he explained.
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