Catalyst raises A$438m for Fund II

The Sydney-based mid-market firm, which had been targeting A$800m, will supplement the fund with a co-investment programme of up to A$160m. It has also made five new hires.

Catalyst Investment Managers, which invests in mid-market buyouts in Australia and New Zealand, has raised A$438 million ($289 million; €223 million) for Catalyst Buyout Fund 2, falling short of its A$800 million target.

The fund’s initial target was optimistic, considering the changed environment, said Simon Dighton, a managing director at Catalyst. However, he added that the A$438 million raised, coupled with an additional A$160 million co-investment facility, still allows the firm to invest in the mid-market space that it targets.

“In the context of a very challenging macro environment for private equity, we are pleased with the outcome of the fundraising,” Dighton said in a statement.

The co-investment programme is a “preferential allocation to investors in the primary fund based upon their levels of participation in the primary fund”, he said. Investors in Catalyst Buyout Fund 2 include IFM, Australian Super, Wilshire, Unisuper, Macquarie, ARIA Axa, ING and Norinchukin. Campbell Lutyens placed the fund. 

Like its predecessor, Fund II will invest in established, cash-generative businesses headquartered in Australia or New Zealand, typically those with enterprise values of between A$75 million and A$400 million.

In the context of a very challenging micro environment for private equity, we are pleased with the outcome of the fundraising.

Simon Dighton

The firm will invest across a range of sectors with a particular emphasis on consumer-facing opportunities, Dighton added.

Catalyst Buyout Fund I closed on A$390 million in May 2006. That fund is fully invested across seven deals, Dighton said. The firm’s last investment, barring follow-on investments, was the April 2007 buyout of Valley Longwall, a provider of underground drilling and ancillary services to the coal mining sector.

Catalyst has also made five new appointments to coincide with the closing of its fund. It has hired Dan Dempsey as an executive director. In his new role, Dempsey will be responsible for leading the portfolio operational investment team. He was earlier at LEK Consulting, where he advised clients on strategy, operations and acquisitions.

The firm has also hired Duncan Mann, Mark DeAmbrosis, Nick Dignam and Andrew Coventry as investment managers. Mann was earlier an associate director at UBS investment bank in Sydney; Dignam formerly worked at Ernst & Young's transaction advisory division in Brisbane; DeAmbrosis was earlier a consultant and global consulting major McKinsey, before which he worked at the International Finance Corporation; and Coventry was earlier at LEK Consulting in Sydney as well.

Following the new hires, Catalyst has an investment team of 15 across its offices in Sydney and Melbourne.