The rise of ESG could create more opportunities for deals that impact the planet and the bottom line. Take One Equity Partners’ recent acquisition of Norit Activated Carbon from Cabot. Cabot’s purification solutions unit makes activated carbon used to treat water, food, pharmaceuticals and beverages. As the recent acquisition shows, there could be interest in further deals in the space.

“For us, activated carbon is an interesting market to be in; it’s versatile, cost-efficient purification of air and water,” One Equity Partners’ Jospeh Huffsmith says. Add a fragmented market, myriad activated carbon source materials, and as many applications, and the ‘buy and build’ narrative writes itself.

So why shouldn’t the same be true for other players in the space? Market leader Calgon Carbon was acquired by Kuraray in 2018 for $1.3 billion, and has already begun streamlining operations to focus more on purification. The company divested its ultraviolet and ballast units to De Nora last year. The leaner profile could help justify acquisitions closer to Calgon Carbon’s core air and water purification businesses.

Osaka Gas Chemicals’ Jacobi Carbon and Advanced Emissions Solutions(NYSE: ADES) ADA Carbon could be in similar positions as potential consolidators for a fragmented market. With the activated carbon market projected to grow at a compound annual growth rate of approximately 9 percent, the opportunity may be ripe for private equity to roll up smaller players for a long term exit to an established industry player.

Brandon Zero