Quadrant secures $938m for flagship Australia fund

The bulk of commitments came from existing LPs with only one new investor getting an allocation to Quadrant Private Equity No.7 – the firm’s seventh fund as an independent entity, though its 10th overall. The LP split is 55% international and 45% Australian, according to Chris Hadley, Quadrant’s executive chairman.

The firm’s last few fundraisings have operated on an invitation basis, which lends itself to a speedy process. Quadrant Private Equity No.6 took approximately one month to reach a final close of A$1.15 billion in late 2017. There were no new investors, while international LPs accounted for 60% of the corpus. This was the first time Quadrant passed the A$1 billion mark.

The firm typically targets companies with an enterprise value of A$100-500 million and commits A$70-150 million per investment. It claims to have made around 80 investments to date, including six by a debut growth fund that closed at A$400 million in 2019. The Australian Financial Review reported that Quadrant has exited 60 investments since inception, generating proceeds of A$6 billion and a gross IRR of 36%.

Three significant exits have come in 2020: disability services provider APM was sold to Madison Dearborn Partners in June for an enterprise value of A$1.6 billion, generating a 4x return; a deal was agreed in October to sell radiology business Qscan to HRL Morrison for A$735 million; and online beauty retailer Adore Beauty – a growth fund company – completed a A$269.3 million IPO in October, with A$137.7 million going to Quadrant.

The growth fund has made two new investments in 2020, taking its overall tally to six, with an increasing focus on internet and IT-related companies. Meanwhile, the flagship buyout vehicle has continued backing traditional businesses, such QMS Media Group, Total Drain Group, and Probe Group, a business process outsourcing platform controlled by Five V Capital. An investment in Total Tools was abandoned after COVID-19 triggered a material adverse change clause.

Lockdowns and distancing measures have presented challenges at the portfolio level, given Quadrant’s exposure to branded consumer-focused businesses. Part of the thesis for establishing restaurant, fitness center and family entertainment platforms through strings of bolt-on acquisitions was to leverage scale when negotiating with shopping mall owners. The firm also owns Journey Beyond, a travel and tourism business.

Quadrant, which now has more than A$6 billion in assets under management, is led by Hadley and four managing partners. Alex Eady and Jonathon Pearce have both been promoted to managing partner in the past 18 months, sitting alongside incumbents Marcus Darville and Justin Ryan. The latter is responsible for the growth fund. The overall team has grown to 21 in the past year with the addition of six new recruits, three of them female.

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• Topics
• Australasia
• Fundraising
• Buyout
• GPs
• Australia
• Quadrant Private Equity