Australia's Wolseley targets $279m for Fund III

The strategy is similar to that of Wolseley's second fund, which closed at A$235 million in June 2008, targeting a combination of buyouts and growth capital as well as succession planning and industry consolidation opportunities. The firm's first fund, raised in 2005, received commitments of A$107 million.

Richard Burrows, a director at Wolseley, said that Fund III would seek to invest in six companies with enterprise values ranging from A$30 million to A$120 million. To come under consideration, companies must also be generating A$7-15 million in annual EBITDA.

"That is where we see the greatest opportunity," he added. "A lot of privately-owned Australian companies are in this segment and many of them face succession challenges over the next 5-10 years."

Overseas investors accounted for approximately one quarter of the Fund II corpus and Wolseley expects this share to increase for Fund III, in line with industry trends. Over the last 2-3 years the firm has been building relationships with international LPs.

Last week Wolseley exited childcare provider Guardian Early Learning Group to Navis Capital Partners for approximately A$120 million, generating a 2.3x money multiple and a 40% IRR on an investment made two-and-a-half years ago.

The PE firm's rapid exit was a product of Guardian's rapid expansion. More capital was required to grow the business over the next 3-4 years - Navis has said it wants Guardian, which runs 69 childcare centers, to double in size during its ownership period - and Wolseley had capped out its investment capacity for this company from Fund II.

"When we first invested we were targeting a business that generated A$15-20 million in EBITDA," Burrows said. "We achieved about A$2 million in EBITDA by acquiring 6-8 centers while also pursuing organic growth by increasing the number of places in existing centers and opening greenfield centers."

During Wolseley's ownership period, Guardian acquired 21 centers - including the substantial acquisition of Jigsaw Corporate Childcare - and grew its employee headcount from 720 to 1,700. Compound annual revenue growth increased 46% and profit tripled.

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• Topics
• Fundraising
• Australasia
• Buyout
• Expansion
• buyout
• Australia
• Wolseley Partners
• Fundraising
• Exit