Anchorage Capital bids for Australian hardware chain

The Sydney-based private equity firm has reportedly bid for a minority stake in Mitre 10, echoing a strategy used in an earlier deal.

Anchorage Capital Partners has submitted a proposal to acquire a stake in the Australian operations of hardware store chain Mitre 10, an Anchorage Capital spokesman confirmed to PEI Asia.

As the terms of the proposal are confidential, the spokesman declined to comment further.

Mitre 10, which has more than 400 stores across Australia, has received two proposals and is currently evaluating them, a company spokeswoman said in an interview. 

The company’s second proposal is from Metcash, an Australia-listed marketing and distribution company. Metcash is bidding for a 50.1 percent stake in Mitre 10, with an eye to acquiring the rest of the company in either 2012 or 2013, according to its website.

In contrast, Anchorage Capital is believed to have bid for a minority stake in Mitre 10, which allows existing shareholders to maintain control of the company, according to The Australian.

In 2007, Anchorage Capital invested A$35.5 million ($33 million; €22 million) in Brisbane-based food manufacturer Golden Circle. At the time, Golden Circle’s shareholders accepted the firm’s bid of A$0.80 per share and rejected Coca Cola Amatil’s takeover bid of A$1 per share, the Australian daily noted, adding the shareholders agreed to another takeover offer of A$1.65 per share just 12 months later from US-based food processing giant Heinz.

Anchorage Capital achieved a gross internal rate of return of 129 percent and 2.5 times multiple on its investment when Golden Circle was sold to Heinz.

Presently, the firm is investing out of its debut fund, which held an A$100 million first close in August. It intends to hold a final close on A$200 million in the next six months, Mark Bayliss, an Anchorage Capital partner, told PEI Asia in September. Up to 30 percent of the capital raised will be invested in Southeast Asia and up to 70 percent will go to Australia and New Zealand.

Anchorage Capital spun out from boutique investment firm Interbank Capital Partners in 2007. Three of the firm's four partners, Philip Cave, Michael Briggs and Daniel Wong, came from Interbank Capital, which was founded by Philip Cave. Bayliss was a former chief financial officer of John Fairfax, an Australian publishing group.