PEP completes exit from Australia-listed Spotless

The private equity firm and all bar one of its co-investment partners sold approximately 207.9 million shares - or their entire 18.9% stake - at A$1.80 apiece, according to a regulatory filing. PEP's fourth fund, which led the investment in Spotless, sold 166.9 million shares, or 80.3% of the total.

This follows two previous sell-downs: In December 2014, 103.9 million shares were offloaded at A$1.92 apiece, generating proceeds of A$199.5 million; and in March 2015, A$229.6 million was raised after another tranche of 103.9 shares were sold, this time at a price of A$2.21.

PEP agreed to take Spotless private in April 2012 after a protracted pursuit. The private equity firm paid A$720 million for all outstanding shares, with the enterprise valuation reaching A$1.1 billion. Fund IV held a 72.5% stake in the business, the co-investors had 20.6%, and the balance sat with company management.

Following a reorganization of the business, which included the exit of unprofitable cleaning and catering contracts and the sale of non-core divisions, Spotless became a public company once again in May 2014. The offering raised A$994.6 million, with PEP and its co-investors selling 132.3 million shares between them for A$211.7 million. They retained around 35.4% and 10.1% of the business, respectively.

Cumulative proceeds from the IPO and subsequent public market sales are A$1.02 billion. There was also a dividend recap in 2013 that generated an undisclosed sum for investors.

Founded in 1946, Spotless employs more than 36,000 people across Australia and New Zealand, working on facilities management, food and cleaning projects that range from maintenance for the New Zealand Department of Corrections to running non-match-day functions at the Melbourne Cricket Ground.

The company reported pro forma revenue of A$2.62 billion for the 12 months ended June 2014, up from A$2.59 billion the previous year. EBITDA jumped to A$252.2 million from A$166.2 million, while net profit rose to A$106.6 million from A$47.7 million, also on a pro forma basis.

PEP is currently raising its fifth fund, which has a target of around $2 billion, not including co-investment opportunities. Other recent exits include an agreement to sell Energy Developments to Duet Group for an enterprise valuation of A$1.92 billion ($1.4 billion). The firm is also said to be negotiating a $340 million acquisition of New Zealand-based Academic Colleges Group.

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