Allegro Fund II eyes fourth investment

The Australian firm has already invested about 20 percent of its latest fund, Allegro Turnaround and Special Situation Fund II, and expects to hit the fundraising trail again in 2017.

Australia’s Allegro Funds has completed three transactions from its second vehicle that closed in June and has deployed about 20 percent of its capital, Allegro co-founder Chester Moynihan told Private Equity International.

Allegro is also looking at another potential deal in New Zealand but it is “early days”, Moynihan said.

The firm is likely to go back to the market to raise its third fund sometime in 2017, he added.

Allegro closed its second fund, Allegro Turnaround and Special Situation Fund II, in June with A$180 million ($129 million; €119 million), following a first close in October 2014. Investors in the fund include New Zealand’s Accident Compensation Corporation and a couple of Australian Superfunds, Moynihan said.

“Forty percent of the capital comes from outside [Australia and New Zealand],” Moynihan said, adding that British Telecom and a number of European family offices are investors. “There’s a good mix”.

The fund is targeting full deployment by September 2018, undertaking two to three deals a year and investing in about 10 companies.

In June, Allegro bought an 87.5 percent stake Carpet Court, one of the largest flooring retailers in Australia and New Zealand, and plans to expand its retail network as part of its three-year growth strategy. Carpet Court, which has more than 200 stores across Australia and about 60 in New Zealand, with a 25 percent market share, was its third investment from Fund II.

Allegro invests in companies that require “transformational” capital, which might be special situations, distressed assets or a turnaround, Moynihan said.

In May, Allegro partnered with GSR management to acquire 100 percent of Great Southern Rail (GSR) from a subsidiary of London-listed Serco Group Plc.