Next Capital’s Go Bus exit reaps 40% IRR

The firm has agreed to sell its stake in the New Zealand business for a reported NZ$170m

Australian private equity firm Next Capital has signed an agreement to sell its investment in New Zealand bus company Go Bus to Ngai Tahu Holdings Corporation (NTHC) and Tainui Group Holdings (TGH), according to a statement.

NTHC will take a two-thirds share in the business, while TGH will take one-third.

The firm is selling the investment at a close to 40 percent IRR, having acquired the company in May 2012, according to a source close to the deal. Although the source could not provide an exit multiple at this stage, she said the firm would likely be pleased with the investment. 

The transaction value has not been disclosed by the firm, but local media has reported it was worth NZ$170 million ($143 million; €107 million).

Go Bus is a New Zealand-based passenger transport business, servicing city bus routes, providing school bus services and charter operations.  These services are based at depots across the country from Auckland to Invercargill.

This is the firm’s third exit this year, having sold its investment in Discovery Parks to SunSuper in February – about three years after its initial investment, according to an earlier statement.

The transaction delivered Next over 2.5x cash multiple and IRR of in excess of 38 percent, with further potential upside to flow from a remaining interest in the business. The firm also sold portfolio company AeroCare earlier this summer.

Next Capital was established in 2003 by ex-Macquarie executives and has since raised two funds focused on Australia and New Zealand. The firm’s initial fund of A$265 million ($246 million; €184 million) is fully invested, having made investments in seven companies – four in Australia and three in New Zealand. Its second fund of A$285 million has completed seven deals to date, according to the firm, two of which were in New Zealand.

Next is planning to launch a third fund soon, although it is not yet officially fundraising. The firm declined to comment on fundraising plans.