Quadrant secures $217m Australia IT services exit after two-year hold
Quadrant Private Equity has sold Australian IT enterprise services business Arq Group to NCS Group, a SingTel Group-owned IT and communications engineering player, for AUD 290m (USD 217m).
The private equity firm carved out Arq from a parent company of the same name in February 2020. Based on an entry valuation of AUD 35m, it has generated a return of more than 8x.
It represents a second exit for Quadrant’s inaugural growth fund, following an IPO by beauty e-commerce platform Adore Beauty in 2020. Fund I closed on AUD 400m in 2019 and made eight investments in total. A second fund of AUD 530m was raised last year.
Quadrant introduced growth strategy was introduced to address opportunities that were being overlooked as its buyout funds became larger with each vintage. It writes checks of A$30-50 million for minority and control positions.
Headquartered in Melbourne, with offices in Sydney and Brisbane, Arq has deep expertise in cloud, digital, data and analytics solutions. It claims to be the fastest-growing digital services company in Australia, with revenue projected to reach AUD 118m in 2022, a year-on-year increase of 38%. Projected EBITDA is AUD 18.4m, which translates into a 15.7x acquisition multiple.
Arq serves half of the 20 largest companies listed in Australia, with coverage spanning financial services, utilities, retail, healthcare, travel, and government agencies. Customers include ANZ Bank, AustralianSuper, Domino’s, Qantas, Transurban, NAB, Queensland state government’s Department of Education, and Victoria state government’s Department of Transport.
NCS has now made four acquisitions in Australia in the past 15 months across IT services, cloud consulting, and cloud transformation. Arq’s strong partnerships among local cloud hyperscale platforms are regarded as the final piece in an end-to-end digital transformation platform.
“Joining the NCS family is a tremendous opportunity to continue growing the business as it now allows us to go international and serve regional clients besides capturing more domestic market share by leveraging synergies within NCS,” said Tristan Sternson, CEO of Arq, in a statement.
“We are well primed for expansion, having grown our government footprint to over a third of our business, acquired many new customers and hired 300 new talents on board.”
IDC expects the digital services market in Asia Pacific to see compound annual growth of 14.6% between 2020 and 2025, reaching USD 170.6bn. Over the same period, the Australian market will expand at an annual clip of 8.7% to USD 12.1bn.
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