Spyglass Investment Strategy Overview
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New Position: API Group Corp. (APG)
API
APi Group Meets Spyglass's Seven Core Investment Criteria
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⚫ Leadership position in secular growth industry
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GROUP
Extremely Resilient: Customers buy APG services because of government regulation and safety concerns
→ US Fire Safety Industry worth more than $17 billion and growing due to increased regulatory standards
→ Global, market-leading business services provider of life safety, security and specialty services with a substantial
recurring revenue base
Results-oriented, entrepreneurial management team with long-term focus and proven track record
→ Russ Becker joined APG in 1995 and became CEO in 2004, he has successfully navigated the business through
multiple market cycles and 90 M&A acquisitions
→ Chairman Martin Franklin has a proven track record of exceptional returns as CEO and Chairman of Jarden
→ 15-year 32% IRR, over 5,000% TSR at previous company
→ Invested $200 million of his own wealth into API Group as permanent capital
Sustainable competitive advantage
Scaled player in Fragmented industry: API Group is significantly larger than its closest competitor
→ Inspection sales force enables continued share gains
Above-average long-term revenue growth
→ 7% organic revenue growth since 2011
Above-average long-term earnings growth
→ Visibility to consistently increasing margins with inspection-led sales team
⚫ Financially sound
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→ Ability to redeploy billions in capital via M&A and buybacks over the next 3-5 years
Attractive valuation
Visibility to over 20% FCF yield over our investment timeframe
→ Initial purchase price of less than 10x forward EBITDA vs. peers trading 15-20x EBITDA
→ Spyglass Base Case model suggests the potential for a 30% or greater annual return over the next five years
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