Australia deal-by-deal player Alceon sees investment uptick

The firm typically targets two new deals each year – writing checks of A$30-70 million ($21-50 million) for majority stakes – and exits a couple of existing positions, said David Wilshire, who leads the business alongside Zac Midalia. Wilshire was previously at Babcock & Brown and Goldman Sachs, while Midalia worked for Kin Group, which is owned by billionaire Raphael Geminder, and M.H. Carnegie & Co.

In 2021, Alceon has acquired equipment rental company Orange Hire with Arcadia Capital – a deal-by-deal investor established by Leigh Oliver and Sam Walker, formerly of The Carlyle Group. It also bought a 20% stake in Think Childcare Group, attempting to block a bid by Busy Bees Early Learning. This was in vain and Alceon sold its position to Busy Bees for a 2x return.

A A$50 million investment in Specialist Medical Services, an ophthalmology and short-stay hospital business, was completed recently, Wilshire and Midalia told Mergermarket, AVCJ’s sister title. They expect to announce a fourth deal in about two weeks.

“The advantage [with deal-by-deal] is that we can customize every deal based on the specific business and we can do deal structure differently,” Midalia explained. “That really resonates with founders or owners of businesses to achieve real alignment and partnership.”

Every transaction Alceon has completed so far has been fully underwritten. The firm draws on a network of more than 1,000 high net worth individuals and family offices, predominantly based in Australia. Alceon normally commits about 10% of the capital required for each deal from its balance sheet.

Midalia added that they seldom come up against other deal-by-deal investors when pursuing assets. The likes of Five V Capital, Quadrant Growth, Bain Capital, The Growth Fund, and Mercury Capital are more frequent competitors. There is a preference for bilateral deals. Alceon only enters auction processes where it believes it has a competitive advantage.

Midalia pointed to grocery business Harris Farm as an example. Alceon’s parent has a property arm, so it was able to offer concrete proposals for rolling out more sites. It was among the last few bidders in the process, but ultimately lost out when the family owners of Harris Farm decided to fund expansion internally, the Australian Financial Review reported.

Alceon’s other existing investments include listed retailer Mosaic Brands, homeware business Marlin Brands, and discount retailer Cheap as Chips. It owns a majority interest in Cheap as Chips, a minority interest in Marlin, and remains the largest shareholder in Mosaic. Holding periods tend to be 3-5 years, and the firm targets IRRs of more than 25%.

The private equity business is part of Alceon Group, which has more than $4 billion under management across real, estate private equity, and listed equities, according to its website.

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• Topics
• Australasia
• Buyouts
• GPs
• Australia
• Alceon Private Equity