Crescent nets 'strong' return ahead of fundraise

The Australian private equity firm is set to launch its fourth fund, which is targeting A$500m, on the back of a solid exit.

Crescent Capital Partners will book a “strong” return on the A$460 million (€327.7 million; $444.9 million) sale of Australia’s National Hearing Care (NHC) to Italian hearing aid retailer Amplifon, a source told sister news site PEI Asia.

At the same time, Sydney-based Crescent is about to launch its fourth fund, Crescent Fund IV, which is targeting A$500 million for investment in the firm’s preferred sectors of healthcare, insurance, services, manufacturing and mining. The firm plans to start talks with new and existing investors at the beginning of October, the source said. No details on expected timings for the fundraise were given.

Crescent Capital originally invested in NHC in 2006, acquiring an 85 percent stake in the audiology business for A$104 million. The investment was made out of Crescent Fund II and Crescent Fund III, which closed on A$100 million and A$400 million respectively.

As has been seen with many Australian exits recently, Crescent had been running a dual-track sales process for the audiology business. Earlier in September, media reports predicted a listing would fetch more than A$400 million. Australian private equity firm Ironbridge was also reportedly eyeing the company, although it declined to comment directly.

Established in 1997, NHC operates in Australia, New Zealand and India and has a network of approximately 200 clinics and 240 audiologists. The company holds a 16 percent market share in Australian and 45 percent in New Zealand.

Global law firm Baker & McKenzie served as the legal counsel for Amplifon on the transaction, while Crescent Capital was advised by Macquarie and JP Morgan.

According to the firm’s website, Crescent Capital currently manages more than A$500 million of capital, and has completed 17 deals and over 40 bolt-on transactions across Australia and New Zealand.

The NHC exit follows hot on the heels of a much smaller trade sale this week, which secured an exit for Propel Investments. The lower mid-market firm sold investee company Hudson Building Supplies to metals distributor Crane Group for a total of A$31.5 million.

The two sales will be heartening to the Australian private equity industry whose most immediate problem is the constrained exit environment. According to one panel session at last week’s Australian Private Equity & Venture Capital Association conference, there could be “north of 50” private equity portfolio companies looking for exit in the next 12 months.

This “wall of exits” – the backlog built up during the global financial crisis – is fast becoming urgent as firms anticipate their next fundraising, said panellists.