Platinum Equity surfaces in 7-Eleven auction

7-Eleven Australia has attracted a diverse range of bidders from industry rivals to private equity firms. Picture NCA NewsWire / Seb Haggett

Platinum Equity is now believed to be the opportunistic private equity investor in the competition for fuel convenience retailer 7-Eleven.

The LA-based buyout fund that manages assets worth $US36bn is known as a highly opportunistic investor.

Platinum recently purchased the Australia and New Zealand operation of building materials company Jeld-Wen for $688m, a discounted price amid tough building conditions, with the US parent under pressure to get money through the door.

It was the under bidder to buyer Allegro on Toll Global Express, so is a known contender for Australian targets that the usual private equity buyers would pass on.

It also purchased Australasian business OfficeMax in 2017.

Seven & I Holdings has pre-emptive rights to buy 7-Eleven, but Ampol is considered a favourite if it is serious about the business because of the synergies it could extract.

It would likely need to sell assets to gain permission from the Australian Competition and Consumer Commission.

Working on its bid is investment bank UBS, and while the company would not need to raise equity to buy the operation, it may tap the market for some cash to fund a deal.

Deterring other buyout funds like Blackstone, Brookfield, Kohlberg Kravis Roberts, TPG Capital or The Carlyle Group that typically compete for large offerings like 7-Eleven, is the company’s exposure to oil refining and the tobacco industry.

The investors in private equity firm funds are becoming increasingly conscious about environmental, social and governance (ESG) factors when making their investments.

There is also the question of electric cars, and what would be the exit strategy for the fuel convenience group in the coming years, but turnaround funds are lured by the cash flow stream of such entities over the years before they may diminish in size due to structural industry changes.

7-Eleven is up for sale through Azure Capital.

It generates annual earnings before interest, tax, depreciation and amortisation of about $220m.

It is up for sale on behalf of the Withers and Barlow families.

The business operates everywhere in Australia except Tasmania, the Northern Territory and South Australia, which creates growth opportunities for the buyer.

It has a licence to operate and franchise 7-Eleven stores in Australia from the US-based 7-Eleven.

Its 750 stores are located across Victoria, NSW and Western Australia, processing 250 million transactions each year.