BLOG - The Dragon's Den
Richard Elliott, Investment Manager
I recently had the opportunity to visit China as part of a visit to the Chinese manufacturing facility of John McGavigan Suzhou Ltd, subsidiary of Maven’s investee company John McGavigan Ltd (JML), based in Bishopbriggs (Scotland). This trip also allowed us to conduct due diligence on the manufacturing plant of a business where we are well advanced on a new private equity transaction.
After an 18 hour flight via Dubai to Shanghai, where it was 28 degrees at 1.30am, the hour long taxi journey to the bright lights of Shanghai City at Grand Prix pace confirmed that this was going to be a variation on the normal business trip!
The first day involved a three hour drive to Suzhou to meet the general manager of JML’s Chinese operation. JML is a leading manufacturer and supplier of automotive appliqués and decorative assemblies for Tier 1 automotive manufacturers, such as Bosch, Visteon, Continental and Yazaki, with global brand end-users such as Ford, GM (Opel, Vauxhall, Buick), Jaguar/ Landrover and Toyota.
Maven invested in JML in December 2010 to fund the establishment of a new manufacturing operation in China, and it was really encouraging to see first-hand the fully operational facility, which has been comprehensively fitted out with plant and equipment that provides the capability for the latest high-volume screen printing technology; precision die cutting, thermo and hybrid forming injection moulding, clean room painting, laser printing and complex assembly module management. General Manager Lifeng Wang, as well as being very hospitable, is clearly running a very efficient and professional operation. With the business in China already delivering on its business plan, he has some exciting ideas about how to capitalise on JML’s very strong market profile, including possible expansion into other growing manufacturing sectors.
From Suzhou, it was back to Shanghai for a flight to Qingdao on the North-East coast, where I met the MD and Communications Director of the target business that we have in diligence. We were given a tour of the industrial manufacturing facility which was a real eye opener in terms of its sheer scale and huge workforce. In my view you can’t place to great a value on thorough Due Diligence, and the technology used in many of the key processes, as well as the general efficiency and professionalism of the workforce really was impressive - it certainly gave me comfort that our target business and its management team, who have developed a very strong relationship with the Chinese owners of the Qingdao facility, will continue to be well served by this manufacturing capability.
Following the tour, our hosts laid on a farewell lunch which turned out to be a gastronomic experience unlike any I’ve had before, but that’s a story for another day! Suffice to say this sort of visit is all part of the variety of often unseen DD work that sits behind our investment selection and portfolio management processes.