Affinity Equity Partners, Baring Private Equity Asia, Citic Group and Hong Kong-based PAG are among the firms expected to line up to buy the $1bn Modern Star education resources company on offer by Navis Capital.
Other possible buyers are Primavera Capital and the China-focused buyout fund FountainVest. The business is up for sale through advisory firm Luminis Partners and Morgan Stanley and first round bids are due in the middle of next month.
The company’s large Chinese presence, accounting for about 20 per cent of the overall operation, is likely to be attractive to pan-Asian funds and China-based groups.
Those involved in the sale have spent time in Hong Kong and China meeting with private equity firms as part of marketing efforts for the business.
Modern Star generates about $55m of annual earnings before interest, tax, depreciation and amortisation, and has grown into a sizeable operation through acquisitions worth up to $500m since it was founded in 1998. In 2016, Modern Star purchased Wisdom Education Products, Cyantist and CleverPatch for a collective price of $150m.
Navis gained exposure to Modern Star in 2014 when it bought a stake in the business.
It has been described as a leading Australian business-to-business distributor of education resources and is moving to consolidate the industry.
Another business on the market by private equity firm Archer Capital is the former Australian Dun and Bradstreet data business Illion. The teaser for the sale process is out in the market and price expectations are believed to be high.
Private equity firms globally have plenty of dry powder when it comes to acquisitions amid a low interest rate environment.
Many are running the ruler on various targets, including companies in the Australian listed space, with Caltex frequently attracting attention.
However, despite the appetite by buyout funds for any company even slightly resembling infrastructure, the understanding is that so far none have found a way to make an acquisition of Caltex work.
The company’s market value is $6.28bn and for the six months to June the fuel distributor and retailer posted a $135m net profit on a replacement cost basis, down from $296m during the previous corresponding period. Its debt levels, adjusting for leases, was 41 per cent.
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