Australia's Mercury closes Fund III at $439m hard cap
Australian mid-market private equity firm Mercury Capital has closed its third fund at the hard cap of A$600 million ($439 million).
The vehicle was substantially oversubscribed, and the fundraising process took about four weeks, according to a source familiar with the situation.
Mercury was established in 2010 and raised A$120 million for its debut fund, with almost all the capital said to have come from family offices and high net worth individuals (HNWIs). Some institutional investors came into Fund II, which closed at A$300 million in 2015. This diversification of the LP base has continued with the latest vehicle.
The firm takes a partnership approach to its investments, working closely with shareholders and the management team to realize a portfolio company’s potential. A sizeable exit came last year with the sale of Novotech, an Australia-headquartered clinical trials provider to TPG Capital for an enterprise valuation of A$392 million. The investment multiple was 15.7x.
Mercury acquired a 30% interest from Novotech’s founder in 2013 with the option of increasing it to 50% at a later date. It made international expansion a priority, helping the company boost its presence throughout Asia. The goal was to leverage the US biotech industry’s willingness to outsource and Novotech’s status as the only pan-regional, full-service independent contract research organization.
Healthcare features prominently in the firm’s portfolio. Novotech was one of six Fund I investments alongside Estia Health, while Fund II features Nirvana Health Group and Australia-based Nexus Day Hospitals. The GP won regulatory approval to buy 50% of Nirvana – New Zealand’s largest independent primary healthcare services provider – in September 2017. The business, now operated as a joint venture with the existing owners, is looking to expand outside of its core Auckland market.
Other Fund II investments include volunteer tourism business International Volunteer HQ, SMS gateway and text messaging service platform Message Media, and Hexagon Holdings, Australia’s leading label printer. Mercury first backed Hexagon through Fund I and re-upped in the company to support the bolt-on acquisition of industry peer Hally Group.
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