Affinity picks up 70% stake in Australia’s Primo Smallgoods

The private equity firm will take a 70% stake, with the remainder held by Primo's founders, the Lederer family, Reuters reported, citing a source with direct knowledge of the matter. Affinity submitted its final bid in July, and was said to be competing with Blackstone Group, Archer Capital, Pacific Equity Partners and CHAMP Private Equity at some point during the auction process.

Affinity has apparently secured A$580 million in financing for the transaction from 11 financiers, with a leverage multiple on the debt of 3.5x. This comes as deal sponsors warn that buyouts in Asia are becoming more difficult because banks are holding back on lending, leaving PE firms to increase their cash commitments. Australia and Japan dominate the region's leveraged loan market.

Primo claims to be Australia's largest producer of ham, bacon and small goods, and has contracts with Coles and Woolworths. The company's EBITDA for the last fiscal year came to A$104 million and it projects EBITDA of A$125 million for 2011.

The reported level of competition for Primo reflects private equity interest in Australia's "protein space" - livestock assets that could feasibly be exited to Chinese strategic investors as an alternative to going public.

In March, Archer Capital purchased Brownes Foods, Western Australia's leading dairy products firm and, four months later, Paine & Partners took 50% of fresh produce firm Costa Group. Wolseley Private Equity and Catalyst Investment Managers both own fruit and vegetable firms, Freshmax and Moraitis Group, respectively. Two years ago, Terra Firma bought Consolidated Pastoral Company, Australia's second-largest beef producer.

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• Topics
• Australasia
• Consumer
• Buyouts
• Financing
• Australia
• buyout
• Consumer
• Agriculture
• Affinity Equity Partners