We are generalist investors, which allows Castle Harlan to remain flexible and not beholden to any one industry. Our core investment criteria govern our investment approach, regardless of industry. Notwithstanding this investment approach, over our long history, we have developed significant experience in a number of key sectors.
Consumer Products & Services
Castle Harlan seeks investment opportunities in which the thesis is often to increase customer awareness of products underpenetrated in their markets, or opportunities to take well-recognized and accepted products nationally or globally. Castle Harlan avoids consumer investments in which there is a material risk of fashion or technological obsolescence, high customer concentration, and changes in government regulation. In order to identify and capitalize on opportunities in the consumer sector, Castle Harlan spends significant time understanding key trends in consumer behavior and best practice around sales, marketing, procurement and low-cost manufacturing. Examples of past Castle Harlan investments in the Consumer sector include:
Energy Equipment, Services & Infrastructure
Castle Harlan focuses on investment opportunities in the energy sector that involve equipment, service and infrastructure companies. Castle Harlan avoids making direct investments in oil and gas fields and mines in order to avoid taking direct commodity price risk. Further, Castle Harlan seeks to find companies that are experiencing tailwinds from positive secular trends rather than trying to time a specific cycle. The energy industry is undergoing change as companies are forced to examine their growth prospects and strategies in light of current supply and demand dynamics, government policies, commodity price volatility and an aging infrastructure base. Positive secular trends in the energy industry that Castle Harlan targets include trends towards automation for efficiency and safety purposes, towards offshore and unconventional production, increasing demand for products and services that drive higher recovery rates and critical infrastructure build-out for new production sources. Examples of past Castle Harlan investments in the Energy sector include:
Industrial Manufacturing & Distribution
In the Industrial sector, Castle Harlan looks for companies that have high value-added margins, strong and defensible market positions in attractive niches and opportunities to grow both organically and through accretive strategic acquisitions. Such companies often have proprietary technology, meaningful switching costs for customers, strong distribution relationships and sustainable product innovation capabilities. Castle Harlan avoids industrial investments in which there is high cyclicality in customer demand and material risk of technological obsolescence and changes in government regulation. Globalization is a major theme impacting the industrial sector and Castle Harlan seeks to assist companies to target global sales and cost-saving opportunities, which can dramatically impact a businesses growth trajectory. Examples of past Castle Harlan investments in the Industrial sector include:
Niche Market Leaders
Castle Harlan may invest in what it defines as “niche market leaders,” which are companies that meet all of Castle Harlan’s investment criteria, but do not operate within the consumer, energy and industrial sectors. These companies typically operate in a well-defined segment of their market in which there is a specific set of highly segmented customers and the opportunities for new entrants or new technologies to compete is limited and, at times, structurally challenging. These investments often are infrastructure-like in nature or government-approved monopolies, supported by long term customer contracts and a high level of recurring revenue. Examples of past Castle Harlan investments in “niche market leaders” include:
