Quadrant in quasi-secondary retail deal

Certainly, it combines two prevalent themes in Australian private equity as GPs face a reckoning for investments made circa 2006. In many cases, either the fund is reaching the end of its cycle and capital must be returned to investors, or the financing package is close to expiry and requires renegotiation. This has led to a rise in secondary exits to rival PE firms and a host of recapitalizations, often involving new equity partners.

Super A-Mart-Barbeques Galore is an unusual mixture. The two assets have been folded into a single holding company, of which Quadrant controls just under 60%, having injected A$130 million ($136 million) and secured a new financing package. Ironbridge, which led the original buyouts of the companies, is rolling over its equity stake alongside co-investors Macquarie Group and Partners Group. Together they own 35% of the holding company, with management taking the remainder.

Quadrant's investment, which has allowed Government of Singapore Investment Corporation (GIC) to exit from Super A-Mart, values the combined entity at around A$500 million including debt.

"A lot of people are looking at bringing equity into strong businesses so they can reduce debt," says Marcus Darville, a director at Quadrant. "This one is a bit different because it's somewhere in between a secondary deal and a recapitalization. It is also unusual in that very few retail deals are being done right now because putting together fresh financing is difficult."

Five senior lenders and two mezzanine lenders have come on board, five of which participated in the previous financing package. Darville credits Quadrant's ability to raise the debt to its track record in retail investments.

Ironbridge acquired Barbeques Galore, a retailer of barbeques and barbeque accessories in Australia and the US, via a take-private of the NASDAQ-listed parent company in 2005, paying A$88 million. Super A-Mart, a leading discount furniture and bedding retailer, was added to the PE firm's portfolio one year later through a A$478 million management buyout.

Although merged at the back end and with some room for operational synergies - one third of Barbeques Galore's sales are from outdoor furniture, which is also a significant area for Super A-Mart - the companies will continue to operate as distinct retail entities. Quadrant is keen to establish Super A-Mart, by far the larger of the two assets, as a national player in Australia's A$12 billion furniture industry. There are 34 outlets at present, two-thirds of which are located in Queensland, and the plan is to reach 100.

"There aren't many retail businesses in Australia with this kind of rollout potential," says Darville. "The format works outside of Queensland, so there is a long way to go."

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• Topics
• Australasia
• Financing
• Secondaries
• Consumer
• Australia
• Consumer
• Quadrant Private Equity
• Ironbridge Capital
• Secondaries