Ex-rugby union great’s traffic business in the sights of private equity firm

Investors have bought into Brisbane-based traffic management company Avada Group after private equity group Pacific Equity Partners took a big stake.

Former Wallabies rugby union player and businessman Dan Crowley. Picture: Darren England.

Investors have piled into Brisbane-based Avada Group this week after private equity group Pacific Equity Partners took a big stake in the traffic management company.

ASX-listed Avada, headed by former Wallabies rugby union player Dan Crowley, now counts Sydney buyout fund PEP as a 15.4 per cent shareholder, sending it shares up more than 45 per cent this week as investors bet on a possible takeover move.

PEP also has a big stake in Avada’s major competitor, Altus Traffic Management, the nation’s largest full-services traffic management business. It is understood PEP has acquired the holding in Avada as a strategic investment rather than as a precursor to a full takeover offer.

The stake was acquired at 65c a share, or about $8.5m, which represented a 19 per cent premium to the stock’s 180-day volume-weighted average price.

Avada shares surged 10.2 per cent to 70c on Friday and are up from a low of 48c on Tuesday.

PEP acquired the majority stake in Altus in 2022 for about $200m. PEP, one of the largest private equity groups in Australia, was expected to use the purchase to embark on more acquisitions in the sector, which was characterised by a large number of smaller companies run as family businesses. Altus also has acquired Traffic Diversions Group, a major provider of traffic management services in Victoria, and secured the rights to technology from Highway Resource Solutions, a British group that provides road worker protection systems.

Avada has been on the acquisition trail itself. Last year it completed the acquisition of STA Traffic Management, the company’s third buy in as many years.

Avada is now one of the ­nation’s top five traffic management companies. It has a network of more than 30 depots, 950 vehicles and 2000 employees across Australia and New Zealand.

Mr Crowley said that with spending on roads and other infrastructure increasing across the nation in the lead-up to the Brisbane 2032 Olympic and Paralympic Games, demand for traffic services would only increase. Avada’s board includes some big hitters, including ex-Aurizon CEO Lance Hockridge and former Department of Transport director-general Neil Scales.

Avada listed on the ASX in December 2021 and has led consolidation of a fragmented industry, rolling up 12 traffic management companies in Queensland, NSW, Victoria and New Zealand.

Traffic management is a regulated requirement for civil infrastructure projects. The Australian market is forecast to grow at 4 per cent a year for the next five years on the back of the pipeline of roads, energy and water infrastructure capital expenditure. The company last month reported a 12 per cent lift in first-half revenue to $101.3m. Underlying earnings were $9.3m, up 6 per cent.

Mr Crowley said the results showed the business was well placed to take advantage of future infrastructure demand.

“The growing pipeline of work, our leading position in the market, and ongoing improvements internally, mean the group is poised to deliver a strong trading performance,” Mr Crowley said. “The pipeline for civil services work remains strong due to recurring maintenance requirements of essential infrastructure.”

Weather and cyclone impacts in Queensland in December and January also would contribute to additional work in subsequent months.