Bahrain’s Investcorp buys majority stake in US-based Shearer Supply to boost its portfolio

The company is one of the largest distributors of heating, ventilation and air conditioning products

Investcorp has been investing in North American mid-market businesses for more than 40 years. Photo: Investcorp

Bahrain’s Investcorp, the alternative asset manager that counts Mubadala Investment Company as its biggest shareholder, has acquired a majority stake in Shearer Supply, a distributor of heating, ventilation and air conditioning (HVAC) equipment for residential and commercial properties in the US.

Investcorp did not disclose the total value of the deal but said the previous owners of the company, including Shearer’s management team, the Shearer family and PNC Riverarch Capital will “reinvest meaningfully” alongside Investcorp and remain shareholders in the company.

Founded in 1983, Dallas-based Shearer is one of the largest independent distributors of HVAC products in the US, serving more than 5,500 clients from 22 branches across Texas, Oklahoma, Arkansas, Tennessee and Louisiana.

“Shearer operates in a large, resilient and highly fragmented market driven by non-discretionary replacement demand, which we expect to continue to benefit from strong secular tailwinds, including an ageing housing stock, shortening replacement cycles and favourable regulation, in addition to its attractive southern US geographic footprint where higher average temperatures and a growing population [are] increasing the demand for HVAC products,” said Dave Tayeh, head of private equity in North America at Investcorp.

“We have experienced robust activity across our North American private equity platform this year, underscoring the strength of our strategy in partnering with growing, founder-led businesses as they look to scale their businesses.”

Investcorp’s North America Private Equity group has been investing in mid-market businesses on the continent for more than 40 years and has completed about 70 transactions worth more than $22 billion since inception.

Last month, the company said it has raised more than $1.2 billion from its inaugural North American private equity fund to boost its investments in mid-market services businesses on the continent.

Dave Tayeh, head of private equity North America at Investcorp. Photo: Investcorp

Shearer's acquisition marks an “important continuation of our strategy to identify and collaborate with high-potential businesses across a diverse range of sectors and markets globally”, said Yusef Al Yusef, head of Investcorp private wealth.

“In a fragmented industry with huge growth potential, Shearer combines robust and resilient fundamentals with strong cash flow and, together, we are well placed to take advantage of the opportunities for expansion in the fast-growing HVAC market.”

Set up in 1982, Investcorp has grown to become one of the leading alternative asset management companies in the region.

The company went on an acquisition spree during the Covid-19 pandemic to capitalise on lower asset valuations and continued its aggressive portfolio expansion in 2022.

Investcorp has carried its deal-making momentum into 2023. It announced plans in January to invest up to $1 billion in the GCC property market over the next five years.

In the same month, it announced its first Gulf property investment in a temperature-controlled 19,974-square-metre warehouse in Dammam, Saudi Arabia.

It was the first in a series of property investments worth $100 million in total that Investcorp was assessing in the kingdom, the company said at the time.

In February, Investcorp agreed to make a “significant” investment in Finland-based technology company Eficode to become its majority shareholder.

It is also looking at new investment deals in Japan, Asia’s second-largest economy, as the company continues to expand its operations globally.

Investcorp has 14 offices in the US, Europe, the GCC and Asia, including in India, China, Japan and Singapore. It oversees $50 billion in assets, including assets managed by third parties.