The market is broadly divided into three key areas – Testing, Inspection and Certification:
- Testing involves the capital-intensive analysis of different products (e.g. gold content in parts per billion of a bulk copper consignment) to establish value or to ensure conformity to local, European or global norms;
- Inspection is the personnel-intensive visual inspection of certain products and measurement of their quantity and quality control between buyers and sellers driven by global trade; and
- Certification involves certifying that companies, processes, systems or services meet the requirement of standards (often regulatory) for all kinds of products.
Historically, the market place has been dominated by in-house provision and by public sector/foundation entities. While a number of private sector providers have been established, the top 5 global players still account for less than 15% of the market, with 65% of the market still operated in-house. This leaves a significantly fragmented global market place, presenting operators of genuine scale with significant consolidation opportunities.
We believe the sector enjoys a number of strong organic growth drivers, including:
- Increasing in outsourcing: Complexity and need for technology increases.
- Globalisation: Driving increased movement of products, often requiring testing at departure and arrival.
- Health and Safety requirements: Continue to increase in importance and as a source of value.
- Tighter regulation: Voluntary initiatives become mandatory and organisations continue to seek to stay ahead of regulation.
- Greater scrutiny amongst insurers: On the levels of testing carried out on productions and services, this is a key determinant of insurance premia.
