Pacific Equity Partners’ move on Singapore Post’s $1bn Australian business is believed to be part of a broader roll-up play, as it looks to bulk up the company with the acquisition of rivals here and potentially across the Tasman.
One obvious candidate is the former Toll Global Express business, now known as Team Global Express and owned by rival private equity firm Allegro Funds.
Investment bank UBS has worked for the Christine Holgate-run TGE on a sale in the past, and it is no secret around the market that Allegro would be a seller at the right price.
Another option, after a group like TGE is acquired, is the $NZ1bn-plus Mondiale VGL across the Tasman which is keen on an initial public offering or a sale.
PEP has been highly acquisitive after a $2bn-plus fund raising.
In the Bank of America-advised Singapore Post auction, it fought off competition from Blackstone and BGH Capital in the final round, and was given exclusive due diligence, despite Blackstone being earlier named as the frontrunner.
Earlier on, both New Zealand-listed Mainfreight and TGE took a look, but the contest was then narrowed to just the buyout funds.
Should PEP buy the Singapore Post assets, it would secure the local brands Freight Management Holdings and CouriersPlease, with the overall offering generating about $120m in annual earnings before interest, tax, depreciation and amortisation. Freight Management Holdings is described as a diversified logistics holding company with fourth-party logistics and warehousing, transportation and technology divisions.
The big drawcard for buyers is believed to be EFM Logistics, a capital-light business within the Freight Management Holdings operation.
EFM offers supply chain management services and does not have the capital spending requirements that other parts of the business have.
Its Border Express business is considered less of an attraction to buyers, as is the case with the other Australian business that is part of the offering, CouriersPlease.
PEP is currently carrying out due diligence on the listed SG Fleet for a $1.2bn buyout, along with aged care provider Opal, and on Friday it was one of the final two groups in the auction expecting to learn if they had won the $1bn Waste Services Group, with Carlyle Group the competitor.
EQT Infrastructure left the UBS-advised race early after establishing that the waste company did not have enough of an infrastructure-like appeal.
PEP has the opportunity to expand the SG Fleet business and gain synergies by acquiring rivals in the sector such as Fleet Partners and Smart Group.
TGE is run by former Australia Post boss Christine Holgate.
It was purchased by Allegro for $15.5m as a distressed asset and recapitalised with $500m of debt.
According to its last accounts, it is losing money, with weak market conditions and high staff and fuel costs weighing on its bottom line.
TGE provides express parcel, freight delivery and domestic forwarding services in Australia, and transport and contract logistics services in New Zealand.
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.