Manuka Health sale a honey of a deal for PEP

Australian private equity fund Pacific Equity Partners appears to have more than doubled its money on the agreed sale of Manuka Health to Malaysia’s Hong Leong Group for a price understood to be more than $200 million.

The sale to the Malaysian listed company was exclusively revealed online by this column yesterday and still hinges on approval from New Zealand’s Overseas Investment Office, which may not be an easy feat under the country’s Labour-led government.

Hong Leong fought off competition from a raft of other suitors — many believed to be from Asia — in a sales process run by Luminis Partners to acquire Manuka Health.

Hong Leong has expanded into various areas outside banking, including financial services, manufacturing and distribution, property development and investments, and hospitality and leisure.

It appears focused on the vitamin and supplement space.

Manuka Health sells a range of honey products, including manuka honey, propolis and royal jelly, as well as products for winter wellbeing and personal care.

It is believed to be New Zealand’s largest producer of manuka honey, which has antibacterial powers as a disinfectant for wounds and cuts, and is used to improve gut health.

The company was previously owned by private investors, including beekeepers, and was founded in 2006.

In 2015, Manuka Health was generating 1000 tonnes of manuka honey a year when PEP bought the business for about $100m. Since then, PEP has invested in the business, taking it from a cottage industry to a corporate operation.

It is understood to have more than doubled Manuka Health’s earnings as it capitalised on the demand for clean and green natural health products, exporting to Japan, the US, China and Germany.

New Zealand’s manuka exports are growing at 21 per cent a year, and Manuka Health’s revenue has grown an average 33 per cent a year over the past eight financial years on a compound annual growth rate.

It is said to have strong export growth potential to global markets, including Asia and the US.

Typically, PEP makes investments of between $250m and $1 billion, although it is prepared to embark on smaller commitments for opportunities with sizeable growth potential.

Around the time of the acquisition, PEP had secured more than $2bn worth of commitments from investors as part of its fundraising, following a series of lucrative exits by the Australian-based buyout firm on the public market.