CHAMP Ventures buys Australian specialist safety wear retailer
CHAMP Ventures has purchased a 79% stake in RSEA, Australia’s largest specialist safety retailer of hard hats, high-visibility wear and site signs. The remainder is held by company management, including 18% by Managing Director Brandon Chizik who will remain in his post.
Melbourne-based RSEA serves the mining, infrastructure and construction industries, The Wall Street Journal reported. It generates annual revenues of $65 million from a network of 17 superstores, eight hire depots and six distribution centers across Australia and New Zealand, as well as from an online shop. The company plans to expand to 60 superstores over the next five years.
Paul Readdy, a director at CHAMP Ventures, described RSEA as a defensive, recession-proof company. "I think the business is extremely well placed particularly because the areas of resources and infrastructure have the wind behind them," he said. "RSEA already has a significant presence in Brisbane and Melbourne and we know there are definitely opportunities to roll out stores in other metropolitan cities as well as regional resource-based centers."
KPMG advised RSEA while Norton Rose provided legal support to CHAMP Ventures.
Mining services companies - in fact any company capable of leveraging the faster, commodities-driven segment of Australia's two-speed economy - have long been popular with private equity.
Last year, energy-focused investor First Reserve Corp. took a significant stake in Calibre Global, which provides engineering, procurement, construction and management services to mining companies in Western Australia. In November, Navis Capital Partners exited safety footwear manufacturer King's Safetywear to Honeywell International, securing a 4-5x return on a $74 million investment made in 2008. Navis' inorganic growth strategy saw King's acquire Oliver, the leading industrial boots brand in Australia.
RSEA is the second investment made by CHAMP Ventures Investment Trust No. 7, following the A$35.5 million ($35.2 million) purchase of a minority stake in SG Fleet, a fleet management and salary packaging service provider, in April.
The fundraising target is A$450 million and, as of September, it had attracted capital commitments of A$275 million. Like many Australian private equity firms, CHAMP has to deal with the retreat of superannuation funds from the asset class and this has led it to tap offshore investors for the first time and also make concessions on fees.
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