Munz family turns tap on $1.7bn plumbing supplies investment

Jonathan Munz and his family have made $1.7bn from their 30-year involvement with plumbing supplies outfit Reliance.

Jonathan Munz (left) at the Melbourne’s Flemington Racecourse in 2006.

Billionaire Jonathan Munz and his family have made $1.7 billion from a three-decade involvement with Reliance Worldwide Corporation, which ended on Wednesday after the sale of their final 10 per cent stake in the listed plumbing supplies group.

Reliance (RWC) shares have almost doubled since floating on the ASX at $2.50 in April 2016, but fell more than 5 per cent on Wednesday morning after Mr Munz revealed he was selling $367 million worth of stock in the company and stepping down as chairman.

But a source close to Mr Munz told The Australian that the billionaire did not want to stay on the Reliance register while having no managerial involvement in the group. The source also said shareholders should not be alarmed by his exit given the Munz family sold down their stake first at the initial public offering and then a 20 per cent block trade at $3.55 in August 2017.

“They could have worried at $2.50 and then at $3.55, but they would have been making a wrong call then. [Munz] is aware of his reputation in this sort of thing, but the reality is the company is in good nick and has a good base going forward.”

The Munz family has made $1.7bn from the three transactions, the last of which marks the end of an era given they took over Reliance in 1986 when it had annual revenue of about $14m and was solely focused on Australia.

Reliance’s revenue for the six months to December 31 was $544 million and the company said it was on track for full-year earnings before interest, tax, depreciation and amortisation in the range of $280m to $290m.

Reliance now makes about 85 per cent of its revenue from plumbers buying their products to undertake repairs and maintenance. The products are carried in more than 1000 Lowe’s and Home Depot stores across the US and Reliance last year paid $1.2bn for United Kingdom company John Guest Holdings.

In a statement to the ASX, Mr Munz said he had “decided to focus on other things” and that “being a chairman of an ASX100 company involves significant time and responsibility.

“I have been involved with RWC for 33 years and it is now time to move on. I am very proud of what we have achieved.”

He also paid tribute to Reliance chief executive Heath Sharp, who Mr Munz said “heads up a great management team that has increased EBITDA from $100m on listing to almost $300m since the IPO almost 3 years ago. This has been achieved through continued organic growth as well as the bolt on acquisitions. “I am confident that this management team, supported by what is a very strong board of directors, has the growth prospects and resources to continue that impressive progress.”

The Reliance share register now has about 25 per cent of stock owned by superannuation funds, a source said, with most of the Munz selldown going to “long-only investment managers”.

Little or no stock had been sold to hedge fund managers. The sale reflected a share price of $4.65 per share, a 4 per cent discount to the volume weighted average price on Tuesday.

Mr Munz has kept a low profile since Reliance went public, but is well known in the Victorian horse racing industry where he is a prominent breeder and chairman of the state’s Thoroughbred Owners Association.

He has ploughed $100m into the 40 hectare Pine Cliff thoroughbred breeding and training facility on Victoria’s Mornington Peninsula, which boasts state-of-the-art facilities including equine pools and horse treadmills. The facility is said to be a profitable enterprise.

Otherwise, the Munz family has diversified their investments across a range of property classes in the US and Europe, as well as the equity and debt markets and also has some private equity investments.

The family fortune also traces back to the 1980s, when it held a string of industrial manufacturing firms under the GSA banner, including companies that made components for the whitegoods and automotive industries and storage for the fruit and vegetable sector. It also sold fridge and airconditioning parts wholesaler and distributor Actrol to private equity business Catalyst Investment Managers for $110m in 2010.