Quadrant to buy Great Southern stake from Allegro

Quadrant Private Equity has agreed to buy a major stake in tourism rail company Great Southern Rail from Allegro Funds management.

The buyout firm, which has recently been focusing on leisure asset acquisitions, will pay between $100m and $200m for a 70 per cent interest.

It will see Allegro more than quadruple its money after originally securing the asset for about $20m.

Great Southern operates luxury Australian transcontinental passenger rail services, The Ghan, The Indian Pacific and the Overland.

Allegro, widely considered more of an opportunistic player in the private equity space, has owned the asset for 16 months - initially buying GSR in May 2015 – and during the ownership period, it stabilised the business and more than doubled its earnings.

It invests in private mid-market businesses within Australia and New Zealand, with more than $650 million of funds under management, including $100m of funds within the Allegro Fund II.

Allegro Founding Partner and Managing Director, Adrian Loader, said when Allegro acquired GSR it needed capital and dedicated focus to grow.

“It wasn’t the right fit under its previous owner but it had a strong management team in place, iconic assets and was well positioned to capitalise on the forecast growth of the luxury experiential tourism sector in Australia,” he said.

“We helped stabilise the business through targeted investment and allowed it to begin to fulfil its potential. As a result, GSR has since launched a suite of highly successful new service offerings and it is close to fully booked for this season with strong sales in place for next year.

“Quadrant, which recently launched its eighth fund valued at $980 million, is a leading mid-market private equity firm investing in companies in Australia and New Zealand.”

It has raised in excess of $3.6 billion since inception in 1996 and its investors include Australian and global superannuation funds, investment funds and sovereign wealth funds.

“With the growing trend towards experiential travel by domestic and inbound leisure travellers, we believe GSR is well placed to benefit,” said Quadrant Managing Partner Marcus Darville.

The transaction is expected to be finalised in early October.

Fort Street Advisers advised Great Southern on the transaction, while Quadrant was self advised.