Pallet pooling company Loscam is preparing to restart a sale process for its operations after Easter, say sources, but this time it is likely that the South East Asia operations will also be included – potentially making a deal far more valuable.
Loscam’s owner, China Merchants, placed its sale process on hold for its Australia and New Zealand operation in July on the back of changing market conditions.
Earlier, a lot of buyers were keen to acquire the business if it included South East Asia, and one of them was understood to be private equity firm CVC. Pallets are not as highly used in the South East Asia region which creates an opportunity for an acquirer to grow earnings there.
The market in South East Asia is more volatile and that part of the business there had struggled through the global pandemic.
Now the entire regional operation is expected to be far more profitable than it was a year ago, creating a reason for the owners to command a higher price.
When the Australian and New Zealand arm was for sale last time, it was understood to have been generating about $100m of annual earnings before interest, tax, depreciation and amortisation, and it is believed that the asking price was close to the $2bn mark.
When a sale process was up and running for the Australian and New Zealand business last year through investment banks Goldman Sachs and UBS, Queensland Investment Corporation, Brookfield and Pacific Equities Partners were all interested buyers, as was Igneo.
Other private equity firms and buyers of quasi infrastructure assets are also likely to take a look. The company describes itself as a trusted name for providing pooling and returnable packaging solutions for supply chains.
Owners include China Merchants, CITIC and FountainVest Partners.
China Merchants purchased the business in 2010 for $US650m in a deal involving Credit Suisse and Deutsche Bank, and in 2018, it sold down a 55 per cent interest to CITIC Capital Partners and FountainVest.
Infrastructure groups that were last year active buyers in the market include Morgan Stanley Infrastructure Partners, Stonepeak, Morrison & Co, Kohlberg Kravis Roberts, CDPQ, Queensland Investment Corporation, Pacific Equity Partners, Igneo, Brookfield and EQT.
Brambles and Loscam in November announced they will partner in China after agreeing to a deal which combines the pallet and pooling operations of their respective businesses CHEP China and Loscam Greater China.
Under the deal, CHEP China was to be sold to Loscam Greater China for an enterprise value of $US132.2m ($198.3m), with the latter issuing shares to Brambles as payment.
The combination of Loscam Greater China and CHEP China results in the largest pallet and automotive container pooler with a combined pool of over 20 million pallets and 1 million automotive containers and other crates, together with a nationwide network of service centres.
HMC moves in on Healthscope opportunity
The listed real estate group says all options are on the table for ensuring its major hospital tenant keeps trading.
Private equity firms not interested in Domain
The $1.7bn Domain Group is said to have been shopped to private equity firms far and wide to test their interest in taking a stake in the business. None appear keen, sources say.