Direct Capital exits New Zealand's Cavalier Wool

According to a statement, local investor Accident Compensation Corporation and Lempriere Australia, as well as CWH’s parent company Cavalier Corporation also sold down positions. Direct Capital took a 25% stake in CWH in a 2010 deal alongside Pohutukawa Private Equity that valued the company at about $42 million at the time.

In a separate release, Pohutukawa confirmed that it had also sold its entire position in CWH, noting that the company had been “highly profitable” through its holding period and had returned regular dividends. Cavalier said in a filing that it had agreed to divest a 27.5% stake in the company to Woolscour Holdings for NZ$13.5 million ($9 million).

CWH claims to be New Zealand’s largest wool scouring operation. This work includes removing contaminants and grease in order to prepare clean wool for further processing by local carpet manufacturers. The company also prepares products for export to international markets on behalf of domestic wool merchants.

Direct Capital led a consolidation of this industry after its initial investment that was said to have resulted in significant efficiency gains. Notable activity on this front included a merger with Lempriere-owned New Zealand Wool Services International (NZWSI) in 2014. NZWSI was said to be the country’s largest wool exporter, marketing to more than 30 countries.

Founded in 1994, Direct Capital positions itself as New Zealand’s first and largest private equity firm with total fundraising of about NZ$1.2 billion to date. This includes a NZ$375 million close last year for the firm’s fifth buyout and growth fund. Deal sizes typically range from NZ$15-60 million, targeting domestic and Australian businesses.

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• Topics
• Australasia
• Exits
• Industrials
• New Zealand
• Direct Capital
• Agriculture