Sydney-based CHAMP Private Equity and its New York-based affiliate Castle Harlan are selling portfolio company United Malt Holdings to GrainCorp, an Australian bulk grain handler.
The transaction values United Malt Holdings at A$757 million (€444 million; $655 million), equivalent to an EBITDA multiple of 5.7. The company is the world's fourth largest commercial malt manufacturer and supplies malt to brewers and distillers for use in the production of beer and whiskey. It is made up of four malting companies: Great Western Malting in the US; Canada Malting in Canada; Barrett Burston Malting in Australia; and Bairds Malt in the UK.
Castle Harlan and CHAMP bought United Malt in September 2006 from US-headquartered Conagra Foods and South Africa-based Tiger Brands, which each owned half of the firm. The purchase price was never disclosed.
GrainCorp is listed on the Australian Securities Exchange and has a market cap of A$806 million. It is funding the acquisition of United Malt through an acquisition finance facility and an equity raising, underwritten by Credit Suisse. The deal is expected to complete at the end of November.
“It's a sensible exit based on what's been the strong operational performance of the business,” CHAMP director Joh Haddock told PEI Asia. “It's a natural fit as related to business development.”
CHAMP had initially planned to sell United Malt in mid-2008, before it began fundraising for its third fund, CHAMP III Funds. The firm held a first close on Fund III at the beginning of September this year after raising A$400 million. It is aiming to reach its final target of A$1.5 billion in the first half of next year.
The association between CHAMP and Castle Harlan dates to the Australian firm's inception in 2000, when it was established by the Castle Harlan team and the two founders of Australian Mezzanine Investments, Bill Ferris and Joseph Skrzynski. Castle Harlan now owns 25 percent of CHAMP's management company, with the remaining 75 percent held by CHAMP's management team. Between them, the two mid-market focused firms have over A$5 billion in assets under management.