Navis sells Australia education business to PEP

Navis acquired Modern Star in 2014 in a transaction that valued the company at about A$215 million (then $190 million). The plan was to leverage growing demand for childcare services created by government efforts to get more women into the workforce.

Value-add operations during the hold focused on transitioning the business from a traditional B2B supplier – targeting childcare centers and schools – toward e-commerce. This included support for nine bolt-on acquisitions. Growth was said to have averaged around 9.5% a year during the period, compared to 5% for the industry as a whole.

According to Navis, Modern Star is now the market leader in both Australia and New Zealand. The company’s education division sells a range of more than 25,000 products to early childhood centers and schools, while its wholesale business has exclusive rights to supply around 5,000 types of educational toys to retailers and independent customers.

"When we invested in Modern Star our objective was to leverage Modern Star’s platform to reach almost every K-12 educational institution in Australia, grow share of wallet and double its market share, which we have successfully accomplished,” Philip Latham, head of Navis Australia, said in a statement. “The business also performed strongly during COVID-19, demonstrating the resilience and diversification of the B2B platform.”

As part of the transaction, Navis will retain its stake in Modern Star’s China business, known as Wisdom. The private equity firm said it continues to see strong long-term prospects for Wisdom as the Chinese early childhood education sector recovers from COVID-19. It noted the company’s premium brand position would likely benefit from any consolidation in the market.

PEP, which invests across a range of consumer and industrial categories, claims to be the largest private markets fund manager in Australia with A$4.9 billion in assets under management. The firm is currently investing its sixth Australia and New Zealand buyout fund, which closed last month at the hard cap of A$2.5 billion.

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• Topics
• Australasia
• Buyouts
• Consumer
• Trade sale
• Australia
• Navis Management
• Pacific Equity Partners
• Education
• e-commerce