Australia's Quadrant launches minority equity strategy
Quadrant Private Equity is looking to raise AUD 300m (USD 201m) for a growth fund that will take minority equity stakes in companies across Australia and New Zealand.
The launch of the new strategy was first reported by The Australian Financial Review and was subsequently confirmed to AVCJ by a source close to the situation. The new fund is distinct from Quadrant’s existing growth vehicles in that it will focus exclusively on minority positions.
Target companies will be high-growth businesses that are open to external investment but do not want to cede control. Quadrant will acquire stakes of 10%-30% and have board representation. The healthcare, technology, industrials, and consumer sectors are expected to feature prominently.
The firm introduced a growth fund in 2019 to address opportunities that were being overlooked as its buyout funds became larger with each vintage. The first vehicle closed on AUD 400m the same year and its successor closed on AUD 530m in 2021. The remit was to write cheques of AUD 30m-AUD 40m for minority and control positions, but most deals involve control.
Recent activities include a roll-up of three New Zealand-based cybersecurity providers – Quantum Security Services, ZX Security, and Helix Security Services – with a view to supporting expansion into new geographies and service offerings.
Quadrant closed its 10th flagship buyout fund – and seventh as an independent manager – on AUD 1.24bn in 2020.
Growth capital investment in Australia and New Zealand has expanded considerably in recent years. A total of USD 8.1bn was put to work in 2022, pushing the annual average for 2019-2022 to USD 4.8bn. This compares to an average of USD 1.5bn for the prior four years.
Much of the additional investment has gone into the technology sector, tracking significant growth in the software space, where local start-ups are increasingly targeting global customer bases. The sector received an average of USD 1.1bn between 2019 and 2022, up from USD 320m for 2015-2018.
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