It would not have been just investors in Harvey Norman and Nick Scali who would have been following intently their half-year results this month, but the Australian private equity firm Quadrant as well.
There’s a view around the market that a sale of Quadrant’s Amart Furniture business could finally arrive in the not too distant future, amid speculation it is clearing the decks and taking a pragmatic approach to businesses which have been on its books for a long time, making it very open to asset sales.
And the timing makes sense.
Rival furniture retailer Harvey Norman’s shares rallied more than 4 per cent on Thursday with an improving outlook and its profit ahead of expectations, despite it falling 29 per cent for the six months to December to $213.9m.
It said its furniture brands, including Domayne, were well placed for growth.
Nick Scali Furniture, which also owns the Plush furniture chain, has been one of the best performing mid-cap stocks on the market.
Despite reporting a 29 per cent fall in net profit to $43m for the six months to December, it was better than expected, sending shares 19 per cent higher at one stage on the day of the announcement.
Placing Amart on the market now would be the right time for both buyers and the seller.
Quadrant could take advantage of the share price momentum from the positive results of Nick Scali and Harvey Norman that have added to their valuations.
An investor would be buying a furniture company knowing it was the bottom of the market and that inflation had peaked.
With Amart furniture selling discount products, it would also target buyers opting for more affordable options due to the higher cost of living.
It’s typical for Quadrant to not run a sale process but quietly negotiate behind the scenes with a buyer and then surface with a deal – particularly after a sale has not come to fruition following a process unfolding.
Quadrant made efforts to sell its food distribution business Superior Food Services in recent years then quietly sold the business to Metcash for $412.3m this year, just months after speculation that the business was returning to the market for sale.
Amart was founded by billionaire John van Lieshout, who cashed out of the operation by selling to private equity and, at that time, it had a major presence in Queensland.
Ironbridge purchased Super A-Mart in 2006 for $500m before Quadrant Private Equity became a co-owner.
In 2016, Quadrant bought a 25 per cent stake from Ironbridge and boosted performance through taking it to a larger scale that enabled it to buy more of its imported furniture from China and secure better discounts as a result.
There was speculation that before the pandemic hit in 2020, Quadrant was close to selling its Amart Furniture business to private equity firm Allegro Funds.
With talk that Amart is next in terms of asset sales by Quadrant, the question now is whether it sticks with its adviser Jefferies or opts for a fresh set of eyes on the transaction, given that Jefferies has been around the situation for some time.
Healthscope firmly in the sights of Bain
Bain Capital is closing in on its next big target struggling with too much debt – the country’s second-largest hospital operator Healthscope.
Incitec Pivot’s fertiliser price likely too high for some
Potential bidders have been given information about Incitec Pivot’s fertiliser unit, but the jury’s still out as to how much they will be prepared to pay..