Harbert Australia Private Equity, a private equity firm focused on lower middle market transactions in Australia, has held a first close on its maiden private equity fund on A$40 million ($31 million; €22 million). The first close was the result of an anchor investment by its parent, Harbert Management, which is a $2.5 billion alternative asset manager based in the US
The firm has also agreed its first investment, acquiring an 18.1 percent stake in in Solar Shop Australia for A$7 million. The investment values the business at A$50 million.
Solar Shop is an installer of solar systems. The company’s primary business is focused on the sale and installation of solar photovoltaic panels for homes and standalone power systems, solar water heating systems and wind power. In 2008, Solar Shop installed 25 percent of all solar photovoltaic systems in Australia, according to a statement from Harbert.
The investment will be used to enhance the company’s business in its core markets and to set up sales offices across the country.
“The Australian solar photovoltaic market is still in its infancy and will continue to require significant investment by businesses such as Solar Shop,” said Adrian Ferraretto, managing director of Solar Shop.
“With electricity prices forecast to increase by up to 8 percent annually to 2012, and the diminishing price differential to consumers between fossil fuel and solar power, we expect this space to be a major growth industry in the coming years,” said Jeremy Steele, managing director of Harbert.
Steele said that this fund marks Harbert's foray into the Asian private equity market and is the first step towards setting up a private equity business across the Asian region along similar lines.
The fund invests in the Australian lower middle market in companies with an enterprise value of between A$20 million and A$100 million, Brendan Andersen, also a managing director at the firm, said in an interview. The firm will invest between A$5 million and A$20 million in equity per deal on average, and is likely to make between six and eight investments from the fund, he said.
Within Australia, the firm will focus on investments in the states of Victoria and South Australia. It will invest across a wide range of sectors other than biotech and resources.
Harbert Australia Private Equity has a team of four investment professionals. Steele was previously the head of private equity at ANZ. Andersen has a background in business consulting and has worked for Harbert in the US in the past. He was most recently the director of corporate finance at Deloitte Touché Tohmatsu.