Adamantem Capital in divestment mode

Adamantem Capital – as well as Downer EDI – are selling their laundries business Linen Services Australia.

Adamantem Capital is understood to be in divestment mode, and the buyout fund is hiring investment banks for the sale of at least two of its businesses.

The private equity firm, founded by former Pacific Equity Partners operatives, is understood to have hired UBS to revive the sale process for its New Zealand smallgoods business, Hellers.

Meanwhile, Adamantem Capital – as well as Downer EDI – are selling their laundries business, Linen Services Australia, DataRoom understands.

Lazard is understood to be working to find a buyer of 100 per cent of the business, once known as Spotless Laundries, and the understanding is that two of the industry heavyweights based in France are within its sights.

This includes French industry giant Elis, which has looked at Spotless before.

Adamantem paid $155m for a 70 per cent stake in the business when it was up for sale by Downer.

Downer had earlier been keen to sell the entire company, considered capital intensive by former Downer boss Grant Fenn.

It’s one of the largest Australian and New Zealand laundry providers with about 3500 customers and about 1800 staff.

Other local players, Anchorage Capital Partners which owns South Pacific Laundry, and Alsco, looked at the business but it was established that they would not gain permission for an acquisition from the Australian Competition and Consumer Commission.

Adamantem’s laundry business services the healthcare industry, which is more defensive than rival South Pacific, which has more of a hospitality focus.

PEP, where the Adamantem executives used to work, once owned Spotless.

For 2018 to 2019, the then Spotless Laundries business generated $60.4m of earnings before interest, tax, depreciation and amortisation.

Other assets in its portfolio are companies such as Heritage Lifecare, Hygain Holdings – which it has previously had on the market and has sold off the US operation – Zenitas community health and Boost Juice owner Retail Zoo.

Hellers has been up for sale before through investment bank Credit Suisse, which UBS now owns.

The sale could be a challenging assignment, as industry heavyweight JBS operates as the other major smallgoods operator across the Tasman.

It’s a small market, reliant on domestic supermarket sales, and almost half of all pork is imported from offshore – mostly the United States and Canada where larger pigs are produced – before being converted into sausages, hams, salamis and bacon.

Compounding the lack of supply globally of pork that has forced up prices is the weakening demand for high-end products on the back of cost-of-living pressures.

Globally, small good producers make earnings from between 15 to 18 per cent of sales, but the profits are less in Australia and New Zealand as high labour costs also have an impact.

Such businesses would likely sell for single-digit multiples.