Exclusive: Wolseley delays fundraising

The Australian lower mid-market fund is postponing fundraising for its third vehicle as it continues to exit Fund II investments.

Australian lower mid-market firm Wolseley Private Equity is postponing fundraising for its third vehicle until it has exited more of its Fund II investments, Private Equity International has learned.

Last year it was understood that the firm had launched Wolseley Partners Fund III and was seeking A$300 million.

Managing director James Todd told PEI that Fund III did not officially launch last year; rather, Wolseley “took some early soundings” to determine interest levels from LPs and discuss timings. 

“We had a think about going out for Fund III last year, but the short answer is we still have seven of our eight investments from our second fund, so we thought we were better off harvesting Fund II, delivering more money back to our LPs and then raising Fund III,” Todd said.

Todd added that returns for Fund II are “looking very strong” and that the firm expects to have returned invested capital to LPs with five businesses remaining in the portfolio.

“If we speak to the LPs it's all about exit data points and returns on funds,” Todd said. “The better positioning of distributions and outlook for returns seeks to narrow down the timing for the capital raise.”

Todd said Wolseley is currently working on three exits and intends to return to market with Fund III toward the end of the year.
“We're not a large team so we can't stretch ourselves too thin,” he said.

Wolseley's first fund, a 2004-vintage, was around A$107 million. It's second, a 2007-vintage, collected A$235 million and currently has a gross IRR of more than 20 percent, Todd said.

Wolseley invests in Australian and New Zealand companies with enterprise values of between A$30 million and A$120 million. Its current investments include The Byron Group, a manufacturer of ambulances in Australia in which the firm invested in May 2010, and Abergeldie, a provider of infrastructure solutions across a number of sectors including water, substations, bridges and mining that the firm backed in July 2010.

In September 2013 Wolseley sold its investment in Australian childcare service provider Guardian Early Learning Group to Navis Capital Partners. The sale was Wolseley's first exit from Fund II, and generated a return of 2.5x and an internal rate of return of 50 percent.