Pacific Equity Partners (PEP) is a private equity investment firm focusing on transactions in Australia and New Zealand. PEP invests across a range of industries and sectors and in turnaround and growth capital transactions.
Company type | Proprietary limited company |
---|---|
Industry | Private Equity |
Founded | 1998 |
Founders |
|
Headquarters | Sydney, Australia |
Products | |
AUM | A$10 billion (2022) |
Website | www |
The firm is based in Sydney, Australia, and was founded in 1998 by Rickard Gardell, Paul McCullagh, Simon Pillar and Tim Sims. All but McCullagh previously worked together as executives at Bain & Company.[1][2]
The firm has generated several buyout funds for investors. By 2022, these funds had $8.6 billion under management.[3] The launch of a continuation fund that year lifted that figure to $10 billion, making the company Australia's largest private equity firm, according to Australian Financial Review .[4]
In 2023, the firm announced its first "Gateway fund" which it described as a mechanism by which private investors may access global private equity investing, with reduced initial investment requirements.[5] In this approach, capital is distributed into PEP funds alongside funds from high-end global private equity firms such as Bain Capital and Leonard Green & Partners.[6]
The firm is reported to be launching its seventh buyout fund (Fund VII) sometime in 2024, with current investment expectations of A$3 billion, which would make it one of the largest Australian funds of its kind.[7]
Since its establishment in 1998, the firm is said to have completed 40 private equity buyouts by 2023.[8]
Apart from buying and operating large companies, PEP has made 100 "bolt-on" acquisitions in the same 25-period, these are smaller firms, bought and merged with portfolio companies, for their strategic value.[9] PEP claims to have "at least doubled" investor monies in 12 of its previous 13 deals, which have included the purchase, restructure and resale of several Australian companies such as Spotless and Hoyts.[8][10]
Some of the firm's recent investments have included Patties Foods,[11] iNova Pharmaceuticals,[12] the medical devices group LifeHealthcare,[13] the smart metering company IntelliHUB,[14] and Evolution Healthcare.[15] (The sale of Patties being the one of 13 resales where they did not meet their "doubled" standard, due to low post-Covid earnings for that food group.)[16]
The following schedule indicates the businesses PEP has acquired and which they continue to own and manage, current to February 2024.
Investment | Year Acquired | Description of Transaction | Ref. |
Zenith Energy | 2020 | Public to Private. Agreed in March 2020, with PEP acquiring the thermal and sustainable power company at $1.01 per share, valuing Zenith's equity at A$150 million at that point. Business now held in the PEP fund known as "SAF I." | [17][18] |
Magentus | 2020 | Public to Private. The health technology formerly known as Citadel Group ASX was delisted in deal led by PEP, as part of a $500 million transaction. Business now held in a fund known as Fund VI. | [19][20] |
Modern Star | 2020 | Secondary buyout. Educational resources company acquired in September 2020, valuing its assets at $600 million. Now held in a PEP fund known as Fund VI. | [21] |
Healthe Care | 2021 | Corporate Carve-out. The private hospital business had been part of China-owned Luye Pharma Group (which retained the Mental Health service arm, renaming it Aurora Healthcare). Now held in a PEP fund known as Fund VI. | [22] |
Agright | 2022 | Private Vendor. New Zealand based poultry business acquired into the secure assets fund known as SAF I. | [23][7] |
Intellihub | 2022 | Secondary. The 'smart metering' business Smart Metering Fund. Held in the PEP fund known as SAF II. | [25][26] |
Cranky Health | 2022 | Private Vendor. PEP acquired controlling stake in the weight loss products business, with Adam MacDougall retaining his minority stake. Valuation said to be $200 million, or 10 to 12 times earnings. Held in Fund VI. | [27] |
Altus Traffic | 2022 | Private Vendor. Traffic management business sold by its founder and chair David Lundberg, for what was said to be $200 million, then on-sold 50% of equity to Brookfield Corporation at $3 billion including debt. Stake is held in Fund VI. | [28] |
iNova Pharmaceuticals | 2022 | Corporate Multinational Carve-Out. Co-investment with TPG Inc. in the consumer healthcare products, its value estimated at $2 billion. Held in fund known as Fund VI. | [8][29] |
UP Education | 2023 | Secondary. Australasian private education provider with 30 campuses was first purchased by PEP in 2016, following leveraged buy out, valued at NZ$540 million in 2023, it has been held in the fund known as Education SPV. | [30][31][32] |
The firm's previous investments were dominated by companies in the food and beverages sector, such as Independent Liquor (sold to Asahi Breweries in 2011),[33] Griffin's Foods (acquired from Danone in 2006 and sold to Universal Robina in 2014),[34] Frucor (sold to Suntory in 2008), Peters Ice Cream (sold to Froneri in 2014) and Tegel Foods (acquired in 2005 from Heinz and sold to Affinity Equity Partners in 2011).[35]
Investments | Year Acquired | Description of Transaction | Ref. |
---|---|---|---|
Hoyts | 2007 | Purchase valued Hoyts' Australian and New Zealand operations at $440 million, then on-sold to Wanda Cinemas in 2015. | [36] |
Independent Liquor | 2006 | Purchased in partnership with Unitas Capital for $600 million, later sold to Asahi Breweries for $1.3 billion. | [37] |
Griffin's Foods | 2006 | Acquired from Danone in 2006 and sold to Universal Robina in 2014. | [38] |
Frucor | 1998 | The first investment made by the firm. Purchased for $NZ67 million, later sold to Suntory in 2008. | [39] |
Peters Ice Cream | 2012 | Terms of the deal not disclosed. Sold to Froneri in 2014 for just under $450 million. | [40] |
Tegel Foods | 2005 | Acquired from Heinz for $250 million, later sold to Affinity Equity Partners in 2011 for $600 million. | [41] |
WINconnect | 2019 | Purchase of community energy network provider for deal understood to be worth around $100 million. Purchased by Origin Energy in 2021.[42] | [43] |
Manuka Health | 2015 | Sold in 2018 for NZ$300 million. PEP first purchased Manuka in 2015 and made key changes including expanding the company's operations and leading an industry reform to standardise honey grades, allowing better transparency on quality and reducing counterfeiting. This work gained industry recognition in 2018 for quality management and responsible investing.[44] | [45] |
Allied Pinnacle | 2015-17 | Acquired Pinnacle Bakery & Integrated Solutions ($200 million), a maker of bakery ingredients and frozen baked products, from Kerry Group in 2015, before adding Allied Mills ($455 million, including debt) in March 2017. Sold to Japan's Nissin Foods in February 2019. | [46] |
ACG | 2015 | NZ private education provider. Divested in 2018 to UK-based Inspired Education Holdings.[47] | [48] |
Pacific Equity Partners was founded in Sydney, Australia, in 1998.[49] The founders came from the consulting and banking sectors: Rickard Gardell, Tim Sims, Simon Pillar all from Bain & Company; and Paul McCullagh, from Salomon Brothers.[50] While McCullagh stepped back from management operations in 2017, as of 2023 all four had remained in the partnership.[50]
Some industry commentators have described PEP as having an 'apprenticeship' culture, with long-standing founders and senior staff deliberately hiring junior employees, as it enables cultural formation within the firm over a long tenure.[8] Staff longevity and team-based approaches to deals, likened to a management consulting ethos, may have helped make the firm distinctive in its market.[51][8]