Australian PE in five charts

Private equity firms are making fewer but larger investments and mainly in the consumer services and retail, according to data from Australian private equity association.

Private equity fundraising, investment and divestment were positive in the 12 months to June 2017, when viewed in the context of ongoing subdued business outlook across many sectors of the economy, according to a report from the Australian Private Equity and Venture Capital Association.

Twelve private equity funds raised a total of A$2.03 billion ($1.5 billion; €1.3 billion), compared with 10 funds that collected A$2.17 billion in FY2016. Quadrant Private Equity held a A$980 million first and final close on Quadrant Private Equity No.5 in August last year and CHAMP Private Equity closed on A$735 million on Champ IV in May this year.

In addition, buyout/later stage private equity funds were particularly successful, accounting for 61 percent, or A$1.23 billion, of all capital raised but just 25 percent of the 12 funds which held closes during the year. Other fund such as those with a hybrid strategy gathered A$430 million in new commitments.

On the investment front, private equity-backed deals totalled A$3.38 billion during the period, even though the number of investee companies fell to 39 from 60 in the previous year– a reflection of fewer, but larger investments, the report found.

Australia-focused firms invested a total of A$3.26 billion into local businesses across a wide array of industry sectors. Investments in consumer products, services and retail, and business industrial products and services together garnered the bulk of invested capital, taking an 83 percent share.

Some of the largest deals completed in FY2017 include PAG’s A$100 million investment in The Cheesecake Shop in February 2017 and Allegro Funds’ acquisition of Pizza Hut Australia, from US-based parent company Yum! Brands in September 2016.

The average investment value per transaction was also higher in FY2017 than in FY2016, increasing from A$58 million to A$75 million.

Divestment activity was slow in FY17, with fewer initial public offerings than recent years, AVCAL noted, as managers instead looked to trade sales as their dominant exit route.

Nine companies were divested via trade sales, including the sale of Genesis Care by KKR in July 2016 to a consortium comprising China Resources and Macquarie, as well as TPG’s sale of Alinta Energy to Hong Kong company Chow Tai Fook for around $4 billion in April 2017.