Quadrant set for debut deal from Australia growth fund
Australia’s Quadrant Private Equity has made the first investment from its new growth fund, with an agreement to acquire domestic auction sites Graysonline and AreYouSelling for A$60 million ($42 million).
Quadrant launched the fund in February with a target size of A$300 million and a brief to target small and medium-sized enterprises (SMEs) that have slipped from the firm’s coverage as its flagship vehicles have scaled up past the A$1 billion mark. The growth fund closed in April with A$400 million in commitments.
Grays was established in 1922 as a livestock auctioneer. The business widened over time and went online in 2000. It claims to be Australia’s largest industrial and commercial online auction business, offering everything from construction vehicles to garden furniture to consumer electronics. The bulk of its revenue is said to come from industrial vehicles and equipment. AreYouSelling, also known as Car Buyers, is a used car trading platform aimed at individual sellers.
The GraysOnline site had over two million registered users by the end of the 2018 financial year, receiving 45 million visits during the period and selling over one million items. The business generated A$77.2 million in net operating income, up from A$14.1 million in 2017, according to Eclipx Group, its parent company. Net profit rose from A$1.2 million to A$10.4 million. The sale price represents an enterprise value to EBITDA multiple of 7.5x for the 12 months ended March.
Eclipx is best known for the vehicle fleet leasing business FleetPartners, which has been through the hands of several private equity owners. Ironbridge Capital Partners and GIC Private bought it in 2006, made several bolt-on acquisitions, and listed the company as Eclipx in 2015. GraysOnline was purchased through a scheme of arrangement in 2017 at a valuation of A$179 million.
The divestment comes as Eclipx seeks to simplify its business and focus on leasing operations. Underperformance of non-core assets, including GraysOnline, was blamed for the company’s recognizing a sizeable goodwill impairment and a posting a net loss in the six months ended March. Eclipx said in a statement that it would continue to sell end-of-lease vehicles through GraysOnline.
“GraysOnline is one of the most significant e-commerce platforms in Australia with annual online sales valued at over A$600 million. With its significant e-commerce capabilities and iconic trusted brand and heritage, GraysOnline can provide a highly attractive and efficient online transaction-based offering to its growing number of suppliers and members,” Justin Ryan, a managing partner at Quadrant, said in a separate statement.
The private equity firm is partnering with the existing GraysOnline management team in the acquisition. The team will continue to be led by CEO Chris Corbin, who noted that GraysOnline and AreYouSelling represent a strong strategic fit. The former supplies vehicles to the latter for resale.
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