Quadrant sells Australia pet care business for $192m

It represents a very quick turnaround for Quadrant, which acquired a majority stake in City Farmers last September for A$93 million. CEO Clayton Hollingsworth and other investors will also exit to Greencross.

City Farmers operates 42 large-format stores selling pet food, supplies and related products. It is expected to deliver revenue of approximately A$120 million and EBITDA of A$20 million for the 2015 financial year, including post-merger synergies.

Australian Securities Exchange-listed Greencross sees the acquisition as a strategic expansion opportunity, taking its Western Australia pet care retailing presence from five to 26 stores. Once the deal is completed, the company will have 285 locations across Australia and New Zealand, comprising 177 retail stores and 108 veterinary clinics, specialty and emergency centers, pathology labs and pet crematoria.

"The combination of Greencross and City Farmers brings together two of Australia's outstanding pet specialists, and increases our exposure to the Western Australian market. The transaction underscores our commitment to becoming the leader in the rapidly growing pet care market," Jeff David, CEO of Greencross, said in a statement. 

City Farmers was founded in 1991 and bought by Hollingsworth, previously CFO of Australian internet services provider iiNet, five years ago. He was supported by investors such as Alan Green and Brian Singer - founders of Quiksilver and Rip Curl, respectively - and several of these parties decided to stay on when Quadrant came in.

Under Hollingsworth's guidance, City Farmers has grown from 10 outlets to its current 42, of which 22 are less than two years old. "Some very successful entrepreneurs backed this guy to build something from scratch, which he has done, and they have made some handsome returns," Justin Ryan, a director at Quadrant, told AVCJ after the acquisition last year. "We are in the business of backing talent."

According to Greencross, Australia's pet care sector is worth A$7 billion a year and is seeing compound annual growth of around 5%. The food and accessories segment of the market is valued at A$3 billion, veterinary services at A$2 billion and non-veterinary services - dog walking, grooming, washing, and so on - at A$2 billion.

A pet is part of 63% of Australian households and 60% of pet owners say they regard their pets as members of the family.

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• Topics
• Exits
• Australasia
• Consumer
• Quadrant Private Equity
• Australia
• Exit
• Trade sale
• Consumer