Maui Capital

Who: Insulpro Manufacturing
What: Expansion capital for NZ manufacturer of new generation ceiling, wall and underfloor insulation products; Maui Capital owns a 50% shareholding in Insulpro
When: Deal concluded in January 2010
Website: www.insulpro.co.nz


Having built a successful business on smarter new building insulation technology, Paul Vujcich, Managing Director of Insulpro Manufacturing, says partnering with Maui puts the company on a new footing and targets bigger opportunities for growth.

For a long time now the benefits of insulation products in homes and buildings have been well understood and mandated by building codes. But for those actually involved in installing them technological progress has probably seemed slow. Made from fibreglass and glued together, traditional products are itchy to use and require special safety clothing. In the early 1990s Paul Vujcich saw how difficult the products were to use during his time on commercial construction sites in Sydney, where insulation workers were required to don safety gear. Back in New Zealand when he met Godfrey Hall, who had just invented a radically new insulation material, he instantly saw the potential.

Made from the same sort of polyesters used in pillows and sleeping bags, Mr Hall’s new material had none of the itchiness of fibreglass. Its unique heat-welding manufacturing process required no glues, the component in traditional products that often contains formaldehyde and can break down over time. Rolling out like a big blanket over a ceiling, it not only prevented heat leakage through joists but was extremely easy to install. “I immediately saw the potential,” Mr Vujcich says.

Together with other founding shareholders, the two men formed the company Insulpro and bought first a manufacturing plant in Milton in the South Island and, a little later, installed a modern purpose-built plant in Auckland. Since then cycles of constantly rising demand have been met with new investment in research and greater production capacity.

Over five years their insulation was installed in more than 10,000 New Zealand homes. They introduced successful products for acoustic insulation, NOVAhush, and a new high-density insulation, NOVAfloor, for underfloor insulation. Friction-fitted between floor joists without needing to drive staples near unseen electric wiring, this also conferred a safety advantage by removing the risk of electrocution, which has cost installers’ lives. The components for making the insulation had also been developed with an increasing use of fibre made from recycled plastic bottles.

But if the growth had a logic of its own so did the changes it brought to the company. By 2008 they had bought out their other shareholders. With staff numbers swelling from five to 50, sales also continued to grow. But so did the scale of the personal guarantee obligations they carried to provide working capital and to re-invest in increasingly sophisticated purpose-built carding lines to process and recombine their new insulation fibres. Mr Vujcich recalls doing some very hard thinking about a newly uncertain world when he saw news of the Lehman Brothers’ collapse on CNN while in transit at Heathrow. The November 2008 elections in New Zealand were also pending, with no guarantee a new government would continue funding support for insulation for homes.

Having built a successful business on smarter new building insulation technology, Paul Vujcich, Managing Director of Insulpro Manufacturing, says partnering with Maui puts the company on a new footing and targets bigger opportunities for growth.

For a long time now the benefits of insulation products in homes and buildings have been well understood and mandated by building codes. But for those actually involved in installing them technological progress has probably seemed slow. Made from fibreglass and glued together, traditional products are itchy to use and require special safety clothing. In the early 1990s Paul Vujcich saw how difficult the products were to use during his time on commercial construction sites in Sydney, where insulation workers were required to don safety gear. Back in New Zealand when he met Godfrey Hall, who had just invented a radically new insulation material, he instantly saw the potential.

Made from the same sort of polyesters used in pillows and sleeping bags, Mr Hall’s new material had none of the itchiness of fibreglass. Its unique heat-welding manufacturing process required no glues, the component in traditional products that often contains formaldehyde and can break down over time. Rolling out like a big blanket over a ceiling, it not only prevented heat leakage through joists but was extremely easy to install. “I immediately saw the potential,” Mr Vujcich says.

Together with other founding shareholders, the two men formed the company Insulpro and bought first a manufacturing plant in Milton in the South Island and, a little later, installed a modern purpose-built plant in Auckland. Since then cycles of constantly rising demand have been met with new investment in research and greater production capacity.

Over five years their insulation was installed in more than 10,000 New Zealand homes. They introduced successful products for acoustic insulation, NOVAhush, and a new high-density insulation, NOVAfloor, for underfloor insulation. Friction-fitted between floor joists without needing to drive staples near unseen electric wiring, this also conferred a safety advantage by removing the risk of electrocution, which has cost installers’ lives. The components for making the insulation had also been developed with an increasing use of fibre made from recycled plastic bottles.

But if the growth had a logic of its own so did the changes it brought to the company. By 2008 they had bought out their other shareholders. With staff numbers swelling from five to 50, sales also continued to grow. But so did the scale of the personal guarantee obligations they carried to provide working capital and to re-invest in increasingly sophisticated purpose-built carding lines to process and recombine their new insulation fibres. Mr Vujcich recalls doing some very hard thinking about a newly uncertain world when he saw news of the Lehman Brothers’ collapse on CNN while in transit at Heathrow. The November 2008 elections in New Zealand were also pending, with no guarantee a new government would continue funding support for insulation for homes.

As it happened, government support did continue. But the seed had been sown, Mr Vujcich says. If they were to really take advantage of the opportunities they could see, they needed to get somebody else involved. Around this time a major corporate approached them with an offer to buy the business. Mr Vujcich says the numbers for this deal might have made sense, but the process petered out, mostly because they could not see the business succeeding when squeezed into a bigger corporate mould. When Mr Vujcich met the team from Maui he saw a better fit.

“There was just this huge difference between the way the corporate and the guys at Maui talked,” he says. “Their concern was how to preserve the entrepreneurial spirit and all those things that had gone into the company to make it what it is today, against the ‘how do we fit you guys into our mould’ that had been coming from the corporate.”

Insulpro has now significantly expanded its capacity. Mr Vujcich says it has gained hugely from having its first professional independent board. They have appointed key new management personnel. He says it is good to just pick up the phone, “and get access to this whole depth of expertise. You don’t have to wait for a board meeting to talk about what you are doing. So that where you can get a bit too close to your own industry, now we can draw on this whole other impartial perspective.”

The company is not only becoming bigger but also moving from a production to a more market focus. Maui networks are enabling them to forge new alliances in Australia. The future, he says, will be defined by international growth and continued product development.

“For us the relationship is a way of getting some value out of the business we have built up while sharing in its future growth. We can now look at opportunities that otherwise we would not have been able to finance ourselves into. So it brings a lot of opportunity.”

“You don’t have to wait for a board meeting to talk about what you are doing… now we can draw on this whole other impartial perspective.”