Speculate to accumulate: CPA Global steps up Asia investment after reports that company is mulling sale 11 Jul 17
CPA Global has announced an undisclosed investment in Korean IP services provider Markpro. The move comes after recent reports that the company is exploring a possible sale or flotation of the business. In that context, this week’s move to step up Asian market penetration should not come as a surprise to industry analysts.
Markpro was founded in 1992 and was previously owned by Korean private equity firm UTC. Located in Seoul, the company (which boasts international offices in four locations) provides trademark and patent renewal services and access to IP software, and primarily focuses on the management of portfolios owned by Korean and Chinese companies. The specific terms of the investment are undisclosed but CPA – which has engaged in a strategic alliance with the company for 15 years – notes that the combined companies will invest in customer service operations to support delivery of localised versions of CPA’s software and services to Korean customers, and provide regional support for further growth into China.
This regional expansion is all-important, with the move taking CPA’s taking headcount to over 125 employees in Asia. The company has already collaborated for more than four decades with Japan’s NGB Corporation, and this latest move is designed to strengthen its specific presence in Korea and China, where the company claims “it now holds number one market positions”. CPA Global’s CEO, Simon Webster, added in a press release: “Our shared ambition to empower Korean and Chinese customers with localised versions of our technology and services, supported by Markpro’s highest quality local customer service, makes this a very exciting time for both companies.”
This week’s announcement comes just three months after media reports suggested that CPA Global is exploring a possible sale or floatation of the business. CPA is currently owned by UK private equity firm Cinven, which acquired it from London-based asset management firm Intermediate Capital Group in 2012 in a deal reportedly worth around £950 million. The Sunday Times suggested in April that Cinven had requested proposals from banks in order to put together a plan for auctioning off the service provider, with a reported asking price set at £2 billion.
Against that context, this week’s news should not come as a surprise. In May, speaking to World Trademark Review while at the INTA Annual Meeting in Barcelona, Webster acknowledged that, after five years, it makes sense for a private equity firm to start looking at its options. However, he also noted that that CPA is still in investment mode, and would likely continue to be so for another six to 12 months. If a sale is the eventual aim, solidifying its Asian presence makes perfect sense and will make the company more attractive to investors, the Asian market offering a significant future growth opportunity. As we reported previously, CPA is growing in China at between 20% and 30% a year (compared to 2-3% growth in Europe). Additionally, the emergence of more IP-focused mid-tier companies in the country could sustain significant growth in the future.
As we also noted in April, it is likely that possible investor interest in CPA will itself come from Asia. In October last year, Thomson Reuters completed the headline $3.55 billion sale of its IP services business – now named Clarivate Analytics – to Hong Kong-based Baring Asia and Canada’s Onex Corporation. At the time, Jean Eric Salata, CEO and founding partner at Baring, said that the private equity firm wanted to develop Clarivate to take advantage of a “differentiated growth opportunity” presented by the Asia market. It would not be a surprise if other regional entities were eying CPA for the same reason and any deepening of CPA’s presence in Asia will further pique the interest of local investors.
Wherever the eventual investment comes from, and whether it is from an IPO or private equity, the move to step up Asian market penetration will prove attractive to those eyeing future returns.
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