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FOOD GROWTH RATES OVER TIME
US Food Index/Cumulative
Annual Growth Rate
Kainos Average
CAGR
Kainos Total
Growth
10 Years 5 Years 2 Years 1 Year Over Hold
Period
Over Hold
Period
Revenue7.0%8.4%9.4%14.0%10.5%68.3%
EBITDA6.1%10.8%8.8%9.7%15.1%125.4%

Source: FactSet (Data as of 12/31/2011)

The Kainos team is committed to a deeply held set of investment principles and a disciplined adherence to a time-tested investment strategy that is driven by the following three core values: Sector Focus, Change Capital, and Risk Management.


Sector Focus

We will invest in manufacturers and marketers of food products as well as other consumer products businesses where the Kainos team has substantive experience. We firmly believe that specialization and sector focus are critical to generating attractive and consistent returns for our investors. With over 100 combined years of focus on the food and consumer products sectors, the Kainos team has invested in or operated businesses within essentially every subsector of the food industry. This experience enables us to develop an informed perspective on virtually any type of investment opportunity. This sector specialization has allowed the Kainos team to more effectively identify and execute on investments that are undermanaged or identify opportunities for investment that are underappreciated by the broader market.

Thesis Based Investing

Our investment process begins with the development of specific investment theses within the food and consumer sectors. These investment theses are informed by the experience gained through the team’s dedicated sector focus, our extensive industry network, and our collective investing and operating experience in the industry. We proactively develop relationships with companies that fit within our investment theses.

The Kainos Partners were amoung the first in the private equity industry to invest behind the following trends in the food and consumer industry:

Mainstreaming of organic
food movement
Growth in protein consumption
and sports nutrition products
Retailer focus on
private label

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Our strategy is to build a diversified portfolio of growing and strategically relevant food and consumer businesses.

Change Capital

We seek to provide “Change Capital” to each of our portfolio companies. The primary source of returns from our team's investments has been our operationally oriented and hands-on approach in working with management teams to drive earnings growth at our portfolio companies and build companies of strategic value. This strategy is inseparably connected to our ability to identify undermanaged or underappreciated companies which will benefit from our operational focus. This Change Capital strategy is expected to enable our portfolio companies to be transformed and repositioned into strategically relevant companies that should be of strong interest to trade buyers or the public markets.

As part of the due diligence phase and underwriting process, Change Capital initiatives are identified and a Change Capital-based operating strategy developed to increase the sales and profitability and optimize the assets of each company. This active strategy requires intense operational focus and action:

  • Invest in manufacturing capacity and infrastructure to fully capitalize on market opportunities
  • Develop new products and sales channels to grow revenues
  • Develop new marketing programs to reinvigorate tired brands
  • Eliminate redundant costs to increase profitability
  • Invest in automation and lean manufacturing to drive efficiency
  • Manage the revenue mix towards higher margin products
  • Divesting non-core assets to optimize assets
  • Monetize excess working capital
  • Pursue strategic acquisitions that leverage the infrastructure of the business
  • Augment management team as needed


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Risk Management

The Kainos investment process and criteria are designed to provide a stable and consistent platform on which our portfolio companies can create growth. In implementing this objective, leverage is used prudently to ensure our portfolio companies remain long-term and productive participants in their communities.

Over our collective careers, virtually every exit of a food portfolio company has been to a trade buyer or to the public markets.