Pacific Equity Partners may look set to swallow listed software and technology company Citadel for $449m, but it turns out that its local rivals were not too far away from the target before it put forward its offer.
It is understood Quadrant Private Equity had earlier been sounding out the business for a potential acquisition, while some say BGH took a look, although the buyout fund denies this was the case.
However, Citadel chief executive Mark McConnell is understood to have known senior executives at PEP for a long time. He has a close relationship with the private equity firm and is keen on its $5.70-per-share offer.
While the number of mergers and acquisitions emerging may be less than normal due to the COVID-19 pandemic, executives of local buyout funds are believed to be rushed off their feet as they run the ruler over targets trading at low prices due to the health crisis.
Some are under pressure to put money to work, with the deadline to invest money approaching for certain funds.
Healthcare, tech and financial services remain particularly attractive to private equity funds, while buyout funds are also combing through the general industrial sector on the ASX.
PEP recently purchased the Australia operations of the Modern Star education business.
Other private equity funds have been busy, including BGH Capital, which is backed by former TPG Capital executives Ben Gray and Simon Harle and former Macquarie Capital boss Robin Bishop. It outlaid $500m to buy the medical centres from Healius.
Citadel’s co-founders listed it in 2014 as a $100m business.
One is former managing director Miles Jakeman, who holds 8.57 per cent of the business, according to Bloomberg data.
Mr McConnell is the other co-founder and owns 8.01 per cent, and his wife Bryony holds 7.96 per cent.
Shareholders are due to vote on the Citadel transaction in early December.
Macquarie Capital and law firm Gadens are working for Citadel, while Investec is working with PEP.
The transaction was funded by Morgan Stanley and HPS.
Citadel specialises in secure enterprise information management across health, national security, defence and corporate enterprises.
Shares reached $8.68 this year but are now at $5.60.
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