Australia's Allegro hits overall target with Fund IV first close

The corpus is split between a A$500 million core fund and a A$100 million sidecar that allows the firm to flex up and target larger deals. Fund III, which closed in late 2017, has a similar structure: A$290 million in core equity and a A$92 million sidecar.

Allegro said in a statement that existing investors account for 90% of Fund IV commitments to date. Domestic and international LPs are among the new additions. It expects to reach a final close in the first quarter of 2022.

The investment strategy is unchanged. The private equity firm will pursue turnaround and special situations opportunities involving businesses that are in industries facing temporary headwinds or have over-leveraged capital structures, or where there is scope for operational transformation.

“Our deal pipeline is also building strongly. We expect that the removal of COVID-19 government stimulus support and ongoing disruption to business models will result in many companies requiring investment and transformation, creating ideal intervention opportunities for Allegro,” the firm noted.

Allegro’s most recent transaction is also its largest: an acquisition of Australian logistics giant Toll Group’s express delivery division, supported by A$500 million in equity and debt funding. The Fund III portfolio also includes Perth Radiological Clinic, hydraulic specialist Questas, higher education provider Endeavour College, and retailers Ngahuia Group and Best & Less Group.

New Zealand-based Ngahuia was exited in February to Tahua Partners, while Best & Less raised A$100 million through an Australia IPO and parallel strategic investment in July. Allegro realized proceeds of A$91.3 million, while retaining 43.5%. It is sitting on an IRR of more than 500%.

As of mid-September, Fund III was marked at 4x with an IRR of 100%, a source close to the situation told AVCJ last month.

Allegro was established in 2004 by Chester Moynihan and Adrian Loader (pictured). The firm assumed management of its first fund in 2008 as a replacement GP. It also operated on a deal-by-deal basis ahead of closing its second fund on A$180 million in 2015. The IRR across all vehicles for December 2010 to date is 36%.

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• Topics
• Australasia
• Fundraising
• Credit/Special Situations
• Restructuring
• GPs
• Australia
• Allegro Funds
• Fundraising