Asian consortium to buy Australia's Real Pet Food from Quadrant

The Asia-based consortium will work with Real Pet Food’s founders, who will retain a minority interest in the business, to drive growth in Australia and New Zealand as well as accelerating international expansion. China-based Hosen specializes in food and agriculture, while agribusiness conglomerate New Hope and Singapore’s Temasek are longstanding backers of the GP.

This is Quadrant’s second exit in four months to private equity and strategic investors that recognize an Asian growth angle in an Australian portfolio company. In May, it agreed to sell cancer care specialist Icon Group to QIC, Goldman Sachs, and China-focused Pagoda Investment, also at a valuation of A$1 billion.

The GP acquired a majority stake in Real Pet Food – then known as VIP Petfoods – for A$410 million in 2015. It was looking to capitalize on the “humanization” of pets, a phenomenon in Australia and globally that has stimulated demand for premium products and services. Quadrant had already seen this play out with City Farmers, a pet services business that was exited the previous year.

At the time of acquisition, Real Pet Food was producing more than 150,000 metric tons of pet food each year. It ranked third in Australia's pet food industry after Mars and Nestle, but was the runaway leader in the chilled pet food segment, which accounted for about 10% of the A$3.3 billion market. It was also the number one player globally, exporting to the US, Canada, South Korea and Japan.

The company was founded in 1994 by the Quinn family who had previously owned a similar business in New Zealand. With A$300 million in annual revenue and A$50 million in EBITDA, Real Pet Food could have gone for an IPO but the founders decided to work with Quadrant as minority shareholders and further develop the company.

Real Pet Food has since grown significantly in terms of product range, geographical coverage, and brands, with a portfolio that features Nature’s Gift, Farmers Market, Nature’s Goodness and Jimbos, among others. Bolt-on acquisitions include premium dog food producers Billy & Margot in the UK, Ivory Coat Companion Goods in Australia, and Bombay Petfoods in New Zealand.

“For the past two years Quadrant have supported us to grow strongly in our home markets. Now our Asia-Pacific partners are ideally suited to support us as we look to take our success to the Chinese and North American markets,” David Grant, CEO of the Real Pet Food, said in a statement. “Our products being Australian-made gives us a significant advantage. Our provenance will be important as we grow offshore.”

Hosen closed its third fund at $440 million in March with 70% of the corpus coming from institutional investors and the rest from strategic players such as online retailer JD.com as well as New Hope. The GP started out in the renminbi-denominated space with New Hope as its anchor investor. The conglomerate backed a debut US dollar fund in 2012 alongside Temasek and other LPs.

Hosen’s previous investment activity in Australia includes the purchase of Kilcoy Pastoral, a leading premium grain-fed beef processor and exporter, in 2013. It then bolted-on US-based processor Ruprecht as a technology upgrade. The plan was to ramp up the business in China.

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• Topics
• Australasia
• Buyouts
• Trade sale
• Consumer
• Greater China
• Australia
• China
• Quadrant Private Equity
• Hosen Capital
• Temasek Holdings