Australia's Crescent closes Fund VII on $670m

The only disclosed LP is Clean Energy Finance Corporation (CEFC), an Australian government agency, which contributed AUD 80m. Its participation is contingent on Crescent achieving certain decarbonisation goals. CEFC made similar commitments to the most recent private equity funds raised by two other Australian managers, Adamantem Capital and IFM Investors.

Crescent raised AUD 800m for its sixth fund in 2018 and AUD 675m for its fifth in 2014. International investors accounted for approximately two-thirds of each corpus.

The new fund will control and co-control investments in middle-market businesses with enterprise values of AUD 100m to AUD 500m. Crescent is active across industrials, financial services, consumer, and technology-related services, but healthcare is expected to make up the bulk of Fund VII.

The firm has made more than 45 platform investments since its formation in 2000 and completed 150 bolt-on acquisitions. About half of those platform investments have been in healthcare, including businesses involved in diagnostic imaging, dental clinics, pathology, clinical research services, medical devices, mental health, and primary and urgent care.

Last year, Crescent sold PRP Diagnostic Imaging to a long-hold fund managed by IFM at an enterprise value of approximately AUD 800m. The firm picked up the business from an investor group led by ex-Macquarie Group CEO Nicholas More in 2020 for AUD 440m.

Another exit came in 2021 with the sale of Nucleus Network, which claims to be Australia’s largest phase-one clinical trials provider, to The Blackstone Group for a reported valuation of at least AUD 600m. Crescent bought the business from The Baker Institute in 2018.

As part of the arrangement with CEFC, Crescent will set decarbonisation pathways for each Fund VII portfolio company that exceeds the requirements of the Paris Agreement. The goal is to achieve net zero scope-one and scope-two emissions – which cover direct emissions and emissions from purchased energy, respectively – within 10 years of acquisition.

The private equity firm will also take steps to reduce scope-three emissions by mapping out the supply chain of each portfolio company and identifying specific initiatives.

“It’s a pivotal time for decarbonising mid-market Australian companies, with a relatively short period of time to act for companies that wish to achieve meaningful emissions reductions by 2030,” said Lucy Cooper, director of environment, social, and governance (ESG) at Crescent, in a statement.

“At Crescent, we take an active approach in working with our portfolio companies to achieve meaningful change, and we look forward to extending this approach to support our portfolio companies in their decarbonisation journey throughout their investment lifetime within our new fund.”

CEFC, which has AUD 10bn in assets, is usually associated with renewable energy investment. However, its remit is to lead efforts to tackle emissions challenges in sectors such as agriculture, energy generation and storage, infrastructure, property, transportation, and waste.

Rory Lonergan, CIO for infrastructure and alternatives at CEFC, added that Australia’s AUD 42bn private equity industry can play a significant role in helping the country achieve net-zero emissions by 2050.

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• Topics
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• Crescent Capital Partners
• Fundraising