Australia's Archer abandons plans for new fund

Managing directors Peter Gold and Ben Frewin said in a letter to investors that the remaining team members would continue to manage the existing portfolio, which comprises eight companies across two funds. The Australian Financial Review first reported the development and AVCJ subsequently confirmed it with multiple sources.

One industry participant familiar with the GP stressed there are no plans to shut up shop and the letter was intended to end speculation about the timing of Fund VI. Wiggs’ exit will be gradual and happen over several years.

Archer’s historical performance has been strong. Across five funds and two growth funds – the growth team spun out in 2015 to form The Growth Fund – it has reportedly generated a 3.2x multiple and a 32% IRR from 30 exits. Fund VI was originally scheduled to launch in the final quarter of 2016, but the date was pushed back in response to concerns from LPs about investments and exits, sources said. There was also some uncertainty about the team, following several high-level departures in recent years.

Archer took less than four months to raise Fund V, surpassing its A$1.2 billion ($934 million) target to close at A$1.5 billion in December 2011. Three years later, it returned A$300 million in commitments to LPs due to slower than expected deployment. Although the fund was 71% invested by February 2016, A$150 million had yet to be committed by the end of 2017. The investment period finishes in May, but this comes after two three-month extensions, AVCJ understands.

The exits issue primarily involves Fund IV, which Archer finished investing in 2011 with four transactions in the months running up to the next fundraise: Quick Service Restaurant Holdings (now known as Craveable Brands), Healthe Care, V8 Supercars, and the bolt-on of Brownes Foods by DairyWest. While Healthe Care was sold to China’s Luye Medical Group in 2016, attempts to exit Craveable Brands and V8 Supercars – via an IPO and a trade sale, respectively – were shelved last year. Brownes finally went to another Chinese trade buyer in December 2017.

The first exit from Fund V came in November 2017 with the sale of aviation ground handling operator Aerocare to Swissport. The fund still holds aged care provider Allity, credit data business Illion (formerly Dun & Bradstreet Australia & New Zealand), vocational education specialist Aspire2 Group, New Zealand Pharmaceuticals, car dealership Autopact, and haulage company LCR.

There has been considerable turnover in the Australian GP community in recent years with several managers entering wind down mode. CHAMP Ventures decided against raising another fund in 2016 and three executives from the firm went on to form Odyssey Private Equity, closing their debut fund at A$275 million last year. They retain their portfolio responsibilities with CHAMP

Meanwhile, investment professionals from Ironbridge Capital and Catalyst Investment Managers are among the growing vanguard of Australian managers now operating on a deal-by-deal basis.

Wiggs has been a prominent figure in Australian private equity for years, having joined GS Private Equity when it was established in 1997. He participated in the management buyout from Grant Samuel Group in early 2004, which led to the firm being renamed Archer Capital. 

Speaking to AVCJ last year, Wiggs recalled the difficulties involved in establishing the middle-market buyout thesis in Australia. GS sought A$200 million for its debut fund but ended up with A$101.3 million, including a meaningful friends-and-family contribution. The firm made its breakthrough with the acquisition of Tasman Building Products in April 1998.

“It was A$155 million in enterprise value, so it was the largest deal done in Australia in more than a decade. It was also a very successful deal, 4.5x your money,” he said. “It presented so much momentum as to ‘Here is the case study that it can actually be done; now if you provide us with more capital we can continue do these types of deals.’”

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• Topics
• Australasia
• Fundraising
• Buyout
• GPs
• Australia
• Archer Capital
• Peter Wiggs