Allegro acquires Australian mining business

The company is a subsidiary of Hughes Drilling, a drilling business that entered administration in September. Allegro received approval from JSW's creditors to acquire all of its shares for A$15 million ($11.2 million), according to managing director Adrian Loader.

The decline of 26-year-old Hughes came amid an overall slump in revenues for Australia's mining sector, leading to reduced activity among mining companies and lower demand for the company's services. In its final half-yearly report issued before entering administration this year, Hughes indicated revenue of A$45 million for the six months ended December 2015, down from A$55 million for the same period the previous year. Profit fell from A$7.4 million to A$3.4 million over the same period.

JSW operates a fleet of 18 drill rigs and has a staff of about 140. Allegro was attracted to the company by its strong operational capabilities and longstanding relationships with major players in the mining sector. The GP will provide growth capital and management expertise in order to stabilize the business and position it to take advantage of opportunities in the sector.

Allegro focuses on turning around distressed mid-market businesses in Australia and New Zealand. The JSW investment comes from its second fund, which closed last year at A$180 million. Other investments from the fund include Pizza Hut Australia, acquired in September, and Great Southern Rail, which Allegro bought last year and exited to Quadrant in September, giving the GP its first exit from the second fund.

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• Topics
• Australasia
• Industrials
• Buyouts
• Australia
• Allegro Funds
• resources