New investment for Midlin: Azelis

A new company in the Midlin portfolio: Azelis. Without realising it, you have probably come into contact with the chemicals this company distributes countless times already. From beauty products and food to animal feed, building materials, motor oil and many other applications: all these end products contain specialty chemicals distributed by Azelis.

Azelis is a Belgian distributor of specialty chemicals in both life sciences and industrial end markets. The company operates in a niche within the chemicals sector and acts as an intermediary between chemical producers and a highly fragmented customer base.

Specialty chemicals differ from bulk chemicals in that they are not primarily sold on price and availability, but on functionality, performance and specific applications. Where bulk chemicals are mostly standardised products characterised by high volumes and strong price competition, specialty chemicals have lower volumes and higher margins thanks to their specialist nature, technical added value and more exclusive supply.

Distributors play a crucial role in this market. For large chemical producers, it is inefficient to serve the many smaller customers themselves, while these customers in turn depend on distributors for the (often) exclusive supply of chemicals and the technical expertise needed to formulate products.

Through formulation development, Azelis can add significant value for its customers — think of ingredients for food, personal care or industrial applications requiring specific performance, such as a water-resistant face cream formula or a special paint highly resistant to sunlight. Once Azelis has developed such formulations, typically composed of specialty components from various suppliers for which the company holds the exclusive distribution mandate, it can then sell the resulting products to its customers for years.

After a strong growth period following the COVID-19 pandemic, when disruptions in global supply chains boosted demand for distributors, Azelis has recently gone through a more difficult phase. This was mainly the result of customer destocking and increased macroeconomic uncertainty due to the trade tariffs announced by Donald Trump in 2025. The end markets in which Azelis operates began returning to calmer waters over the course of 2026, now that the tariffs have become clear or have been scaled back by the US.

Since late February, however, global oil markets have been disrupted by tensions in the Middle East. These disruptions risk leading to shortages in the supply of specialty chemicals, while several chemical producers have already announced significant price increases. Azelis expects to benefit from these developments, as the company, as market leader, has a very broad supplier network. This allows Azelis to keep sourcing sufficient products for its customers and, moreover, to benefit from higher margins as a result of rising raw material prices.

We currently see an attractive entry point into this high-quality company. We have confidence in a recovery of market growth and in the continuation of acquisitive growth, supported by Azelis's strong cash-generative nature. Moreover, we consider the current valuation attractive relative to peers, despite a comparable financial profile and operational performance.