Sydney-based private equity firm Allegro Funds is believed to be moving forward with a sale of its $400m-odd industrials business Questas Group, hiring investment bank UBS to find a buyer for the company.
It comes after Allegro has already sold the Water Dynamics unit within Questas this year to Envirada.
The industrial company operates in the area of hydraulic, irrigation, pump and engine solutions to the manufacturing, construction, mining, energy, agriculture, transport, waste management and materials handling industries.
Its clientele includes names such as Orica, Fortescue Metals, South32, CS Energy, Glencore, Woodside, JJ Richards, Chevron, GrainCorp, Bluecope, Westrac, BHP and others.
It has a network of over 35 sites nationwide and a portfolio of 17 businesses that provide services including hydraulic power units, chemical injection units, hydrogen solutions, flow control and Advanced Surface Technologies.
The rapidly growing hydraulics business has been its key focus since the company was purchased by Allegro in 2019 with founder Kede Carboni retaining a stake.
Questas has tripled the size of its hydraulics operation over four years and the company’s revenue is about $270m annually with 800 workers.
Its annual earnings before interest, tax, depreciation and amortisation is believed to be in the ball park of about $40m.
With about 10 per cent of market share, it is the industry leader.
The Water Dynamics business generated annual revenue of between $45m and $50m.
The Questas business has made about eight acquisitions and two asset sales under Allegro’s ownership.
The sale comes after Allegro this year also purchased business process outsourcing company Nutun from its South African parent for $120m.
Headed by Adrian Loader and Chester Moynihan, Allegro specialises in special situations and is particularly drawn to corporate carve out opportunities.
Team Global Express, for which it also had previously hired UBS to explore sale options, was purchased from the Japan Post-owned Toll Holdings in 2021 for $US10m, with the private equity firm securing $500m of debt and equity funding to finance a turnaround.
Allegro also purchased the PwC government advisory business that has been renamed Scyne.
It also purchased the retailer Best and Less from Greenlit brands and the New Zealand petrol station chain Gull from Ampol.
Other companies it owns are law firm Slater and Gordon, which it secured through a $150m buyout last year, the Camp Australia childcare business that it gained control of from Bain Capital through a debt deal and Perth Radiological Clinic.
Overall, it manages more than $4bn of assets across Australia and New Zealand.
Allegro’s current fund, Fund IV, has capital commitments of about $750m.
The private equity firm recently assessed acquisitions of Tradelink from Fletcher Building and airline Rex, but are understood to have passed on the former and is not expected to move forward with an acquisition of the regional carrier.
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