PAG buys Australian hospitality business from KKR

The enterprise value is widely reported as being AUD 1.4bn, but a source close to the situation said it is larger than that, without giving more detail. The Australian Financial Review added that PAG has secured AUD 900m in debt financing – a term loan of AUD 700m from a group of banks and a AUD 200m mezzanine tranche.

Several other financial sponsors had looked at the asset, with BGH Capital said to have come close to buying it earlier in the year.

The foundation of the portfolio was Dixon Hospitality, the operator of 50 leasehold food and beverage outlets primarily located in Melbourne, Sydney, and Brisbane. Most were standalone pub, bars, or restaurants with their own defined brand, service proposition, and target clientele.

KKR picked up the business for around AUD 190m in 2017 via its third pan-Asian fund, which closed on USD 9.3bn earlier the same year. The private equity firm pursued an expansion strategy, increasing the number of venues to more than 210 and growing headcount from 780 to over 8,500.

For PAG, this is the latest in a string of consumer deals in Australia. Towards the end of last year, the firm acquired Patties Foods, best known for its range of pie brands, and Vesco Foods, a supplier of frozen foods. The deals, reportedly worth a combined AUD 550m, facilitated exits for Pacific Equity Partners (PEP) and Catalyst Investment Managers, respectively.

Other control investments in Australia include Craveable Brands, a quick service restaurant chain operator, and The Cordina Group, a local poultry producer.

“We are very pleased to partner with AVC [Australian Venue], a proven market leader with an exceptional management team and great potential,” said Lincoln Pan, a partner and co-head of private equity at PAG, in a statement.

“Our goal is to work with strong businesses and help them become even stronger in Australia. AVC has created some of the most unique and iconic venues across Australia and New Zealand, and we are looking forward to supporting them on their next stage of growth.”

Jefferies and Allens advised KKR and Australian Venue; Bank of America Securities and Ashurst advised PAG; and the financing was arranged by KKR Capital Markets.

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• Topics
• Australasia
• Buyouts
• Trade sale
• Consumer
• Australia
• KKR
• PAG