PEP to buy Kerry Group's Australian bakery unit

Financial details of the deal were not disclosed, however, The Australian reported that the purchase price is up to A$250 million ($192 million).

Pinnacle manufactures a range of baked goods, including finished products such as muffins, cakes, and donuts; unbaked speciality products like pastries and bagels; and raw ingredients such as bakery mixes, fillings, and fondants.

The company was formed in 1998 when Kerry expanded into Asia with the acquisition of the Mauri and Pinnacle ingredients businesses of Australian food group Burns Philp. Today the division claims to be one of the largest suppliers in Australia with 3,500 customers ranging from food service and bakery retailers to major supermarket chains Coles and Woolworths. It reported  sales of A$225 million for the 2014 financial year.

"Pinnacle is an excellent business and it is a privilege to have this as the first portfolio company in our fifth fund," said Tony Duthie, managing director at PEP, in a statement. "PEP has a strong track record of investing in consumer products businesses and supporting local management teams to deliver growth."

PEP's fifth fund reached a first close of A$1.1 billion in April last year. The GP is understood to be looking to raise A$2 billion of core equity, with a core group of LPs contributing further capital - potentially A$1-1.5 billion - through co-investment.

The GP has made several previous food-related investments in Australia, all of which have been exited. In 2011 it sold poultry business Tegel Foods to Affinity Equity Partners for around A$600 million, while last year Peters Ice Cream was exited to R&R for A$450 million and Griffin's Foods which was sold to Philippines-based Universal Robina for NZ$700 million ($608 million). 

This latest deal - which was advised by Macquarie, Ernst & Young, and Gilbert Tobin - is expected to close in May. 

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