Australia's PEP set for exit as Asaleo Care raises $616m

It will be the second-largest offering in Australia this year following clean and catering contractor Spotless Group's A$995 million float. Spotless is also a PEP portfolio company and the private equity firm made a partial exit. However, Healthscope, which is owned by TPG Capital and The Carlyle Group, is expected to take top spot in the IPO rankings.

Asaleo is selling 406.7 million shares at A$1.65 apiece, representing the mid-point of the A$1.55-1.80 indicative range, according to a regulatory filing. The offering comprises 210.3 million new shares and 196.4 million existing shares. The stock will begin trading on June 27.

Asaleo, formerly known as SCA Hygiene Australasia, is jointly owned by PEP and Swedish paper products company Svenska Cellulosa Aktiebolaget (SCA). The private equity firm invested SCA's Australasian business in 2011 at an enterprise valuation of A$570 million to create the joint venture. SCA received SEK3.2 billion (then approximately $500 million) for divesting 50% of the equity.

PEP and its co-investors are fully exiting their now 49.5% holding, receiving A$325.8 million. SCA is not selling any shares but the new issue will dilute its stake from 50% to 32.7%. Company management will exit a 0.5% interest acquired in 2013 as part of an existing employee share purchase plan but then acquire a 1.5% stake using the proceeds of a pre-offer management incentive plan.

PEP has already taken money out of the business. In February, Asaleo completed a A$562.7 million refinancing which saw A$250.8 million returned to shareholders. When the joint venture was set up, SCA and PEP each owned 50% of the ordinary shares with the PE firm also holding preference shares. SCA acquired 50% of the preference shares this year, leaving each party with an equal economic interest in the business.

Asaleo operates in Australia, New Zealand and Fiji and has approximately 1,050 employees. Its product line up includes toilet paper, kitchen towels, nappies and tampons, distributed under brands such as Libra, Tena, Treasures, Sorbent, Purex, Handee and Tork.

The company reported pro forma revenue of A$625.1 million in 2013, up from A$617.3 million in 2011. Net profit has nearly doubled to A$61.5 million over the same period. Asaleo is projected to deliver pro forma revenue of A$642.2 million in 2014, EBITDA of A$139.7 million and net profit of A$70.6 million.

Six of the eight-strong management team has been hired since 2011 and introduced a business transformation plan in 2012. Business functions were reorganized to improve accountability for product category performance, sales targets were altered to focus on higher-margin products, investments were made in a more efficient and flexible manufacturing footprint, and an operational review reduced headcount and input costs.

Asaleo and Spotless are both investments from PEP's 2007 vintage fourth fund. Another exit from the fund came with the sale of Peters Ice Cream to UK-based R&R. The private equity firm recently reached a first close on its fifth fund, which is targeting A$2 billion in core equity to be supplemented by co-investment by a handful of sophisticated LPs.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Exits
• Consumer
• Australasia
• Pacific Equity Partners
• Australia
• Consumer
• IPO
• Exit