Quadrant takes majority stake in Australian pet food supplier
Quadrant Private Equity has bought a majority stake in Australian pet food retailer City Farmers for A$93 million ($84 million).
The PE firm will support the nationwide expansion of City Farmers' large format stores. The company currently has 31-outlet network, which is currently concentrated in Perth with an emerging presence in Brisbane and Melbourne, selling pet food, supplies and related products.
"The A$3 billion pet supplies sector is highly fragmented and experiencing strong growth driven by the global trend in "humanization" of pets," said Justin Ryan, a director at Quadrant, in a statement. "City Farmers has a substantial opportunity to build a leading national brand, given a significant share of the specialty retail market is represented by independent operators."
Chris Hadley, managing director at Quadrant, said that his team was impressed by City Farmers' use of technology to develop a scalable platform for expansion. He added that the pet specialty product industry is defensive by nature yet exhibits strong underlying growth prospects.
Last year, Archer Capital Growth Funds, the Australian GP's lower mid-market unit, invested in Best Friends Pet Supercentre, with a view to supporting the founders' expansion plans. At the time, the company was operating 11 supercenters - selling pet products as well as veterinary and grooming services - and wanted to grow its network to 44 outlets.
Another pet food producer, VIP Petfoods, also attracted interest from private equity although a deal never materialized.
This is the fifth investment from Quadrant's third fund, which closed at A$750 million in 2010. Other portfolio companies include auto parts producer Burson Auto Parts, advertising business APN Outdoor, mining wear parts and consumables manufacturer CQMS Razer and furniture and outdoor retailer Super A-Mart and Barbeques Galore.
Earlier this year the private equity firm fully exited fertility services provider Virtus Health via a A$339 million IPO and made another partial exit from retirement village chain Summerset, which went public in 2011.
Quadrant was advised on the City Farmers deal by Ernst & Young and Gilbert + Tobin. City Farmers was advised by Clifford Chance.
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