Anacacia exits Rafferty’s in £42m trade sale

The Australian country manager has sold its investment in the baby-food manufacturer to UK-listed PZ Cussons, just a month after Australian regulators blocked a bid from Heinz & Co.

Anacacia Capital has exited Rafferty’s Garden in a trade sale to soap maker PZ Cussons, according to a joint statement from the firms. Anacacia sold the baby-food business for £42.2 million (€49.3 million; $64 million) in an all equity transaction as it gears up to close its second private equity vehicle.

Although the firm did not disclose return information, the statement said revenue and EBITDA for the year ending 30 June 2012 were £22.5 million and £3.5 million respectively, with growth of 10 percent estimated for the year to 30 June 2013. As of 30 June 2012, Rafferty's had gross assets of £12.5 million.

Anacacia also initiated Rafferty’s export business, which is in early stages of development and will deliver its products to countries including Indonesia and Thailand. 

“PZ Cussons' distribution in countries such as Indonesia and Thailand, together with our understanding of consumers in those markets through our leading Cussons Baby brand, will enable the geographic expansion of Rafferty's Garden to be maximised. Following this acquisition our balance sheet remains strong giving us flexibility for further investment opportunities as they arise,” Alex Kanellis, chief executive of PZ Cussons, said in the statement.

Anacacia bought Rafferty’s in 2010 for an undisclosed amount through a management buyout, buying out the majority of founder Adrian Pike’s stake in the business, according to media reports. 

PZ Cussons' distribution in countries such as Indonesia and Thailand…will enable the geographic expansion of Rafferty's Garden to be maximised.

Alex Kanellis, chief executive, PZ Cussons

In 2012, the firm received an undisclosed buyout offer for Rafferty’s from US food giant Heinz. However, in June 2013, the Australian Competition and Consumer Commission (ACCC) opposed the bid on the basis that Heinz would then own 80 percent of Australia’s ‘wet infant food’ market and 70 percent of the market for infant cereals and snacks. 

“The ACCC concluded that the proposed acquisition is likely to result in a substantial lessening of competition through the removal of Rafferty’s Garden, which has around 40 per cent market share in wet infant food and is a close and effective competitor of Heinz, which also has around a 40 per cent market share in wet infant food,” ACCC Chairman Rod Sims said in a statement at the time. 

Anacacia founder and managing director Jeremy Samuel was reported as saying earlier that the firm was “considering its options” in light of the refused transaction. 

Anacacia did not respond to requests for comment by press time, but Samuel added in the statement, “We are grateful for the extraordinary efforts of the Rafferty’s team and our loyal customers and look forward to continuing to see the business flourish under PZ Cussons’ stewardship.”

Anacacia Capital is an Australian private equity firm investing in domestic small- and medium-sized businesses. In March, the firm sold its majority stake in Australia-based Home Appliances for A$22 million (€17.4 million; $22.6 million) to McPherson’s, a listed Australian housewares marketer, Private Equity International reported earlier. The exit represented an approximate 5x return and a 90 percent annual IRR, according to the firm. 

The exits come as the firm expects to close its second private equity vehicle. It held a second close in November 2012 on A$125 million, above its initial target of A$100 million and said at the time it expects the final close “soon”.