Babson makes Oz debut in PEP-backed Collins Foods

The undisclosed size investment in mezzanine debt notes will be used as part of the restructuring of the fast-food franchisee's existing debt package.

Massachusetts and North Carolina-based Babson Capital has done its first direct deal in Australia, investing an undisclosed amount in mezzanine debt notes in the debt “refinancing” of Pacific Equity Partners-backed (PEP) Collins Foods Group, according to a statement.

Collins Foods is based in Queensland and is the largest KFC franchisee in Australia with 116 outlets across Queensland and two in New South Wales. It also franchises 56 Sizzler restaurants across six countries in Asia and 26 other outlets throughout Australia. Pacific Equity Partners acquired the company in 2005.

The mezzanine investment was made by Babson’s wholly-owned Australian subsidiary Babson Capital Australia and will be used as part of the restructuring of the Collins Foods’ existing debt package.

PEP and Babson declined to comment beyond an official statement released by the mezzanine provider, however, a source close to the deal told PEI Asia that there would be no change to the company structure following the transaction.

Babson Capital Management is a global investor with $129.4 billion in assets under management. Just this year the firm set up an eight-strong team in Sydney to source mezzanine debt and private equity opportunities in the region. As of March, the firm’s mezzanine and private equity group directly and indirectly manages assets of about $5 billion.

Pacific Equity Partners is an Australian private equity firm focusing on buyouts and late stage expansion capital in Australia and New Zealand. Other investments include cinema complex chain Hoyts Group, cleaning appliance retailer Godfreys and beverage producer Frucor.