Allegro acquires Australasian furniture retail portfolio

The assets in question comprise the general merchandise division of Greenlit Brands, a subsidiary of Steinhoff that primarily operates in Australia and New Zealand. They include 322 stores and more than 6,100 employees. The size of the transaction was not disclosed.

The divestment is in line with Greenlit’s strategy of focusing on its core household goods manufacturing, logistics and retail division, which owns brands such as Fantastic Furniture, Freedom, Snooze, Plush, OMF, Unitrans and FutureSleep. The company will retain 319 stores and 3,800 employees.

For the 12 months ended September 2018, Greenlit reported EUR1.29 billion ($1.4 billion) in revenue, EUR43 million in EBITDA, and EUR14 million in operating profit. The general merchandise division accounted for EUR641 million in revenue, down from EUR677 million the previous year. Its EBITDA fell from EUR18 million to EUR7 million and an operating profit of EUR7 million turned into a loss of EUR7 million.

The company noted in its most recent annual report that middle-market household goods brands in Australia experienced challenging conditions, with relatively strong performance from Fantastic Furniture limiting the damage. Greenlit also had to bear some of the financial burdens of an accounting scandal that has decimated Steinhoff’s market value since its exposure in late 2017.

Steinhoff has divested numerous brands globally and restructured operations to generate cash and fill the hole in its balance sheet. Steinhoff Asia Pacific Group was spun off into a stand-alone subsidiary and rebranded as Greenlit in September 2018. Around the same time, Greenlit secured A$256 million ($174.5 million) in credit facilities to refinance and extend the maturity of its debt.

"The general merchandise business includes some iconic retail brands that have long-standing loyal customers and passionate staff that have supported the business serving generations of Australians and New Zealanders. We look forward to supporting a highly experienced management team to transform each of the brands," Fay Bou, a managing director at Allegro, said in a statement.

Michael Ford, group CEO of Greenlit, added that the division was joining a group “with a very strong track record in building and enhancing businesses with a single-sector focus.” Allegro’s previous experience in retail includes the turnaround of New Zealand-based Carpet Court, which was challenged by a bolt-on acquisition strategy that hadn’t delivered synergies and a sluggish housing market.

The private equity firm is currently deploying its third fund, which closed in late December at the hard cap of A$290 million. There is also a A$92 million sidecar for larger deals.

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• Topics
• Australasia
• Buyouts
• Consumer
• Australia
• New Zealand
• Allegro Funds