Caniwi Capital buys exposure to housing boom with Lancer Aluminium purchase
By Pattrick Smellie
March 12 (BusinessDesk) - Wellington-based private equity fund Caniwi Capital has purchased Auckland-based Lancer Aluminium, buying exposure to the booming Auckland residential construction market through the firm, which makes aluminium window and door frames.
Caniwi principal Troy Bowker announced the purchase of the Henderson-based firm, which counts group home builders G J Gardner and Stonewood Homes, and retirement village operator Ryman Healthcare among its customers.
No price was disclosed although the purchase is typical for the boutique, privately held fund, which seeks opportunities at the small to medium end of the investment scale, targeting one or two transactions annually that offer "superior rates of return on capital", said Bowker.
As well as a $300 million suite of commercial and student accommodation properties in Wellington, chicken-rearing facilities leased back to the Ingham's chicken empire, Caniwi has in the last eight years purchased and onsold plastic container distributor Stowers Containment Solutions and in 2016 bought Petroleum Equipment Services, which sells products and equipment used in service stations, truck stops, airport and marine fueling sites.
Bowker said Caniwi was seeking businesses declaring pre-tax profits in the $2 million to $8 million range and was focusing "heavily on building its private equity division over the next 24 months by increasing its portfolio of businesses to a value in excess of $100 million".
Disposal and growth options for owners of businesses in that target size range were "limited at present as bank financing is getting harder to obtain and the capital market in this size is underdeveloped and doesn’t function efficiently,” said Bowker.
“We continue to see value in acquiring businesses within the size range we are targeting and we are achieving very high returns on equity through a combination of improved management, financial processes and governance.”
The owners of LAHL, a company registered at the same address as Lancer, are listed on the Companies Office website as Jason Farmilo and Alan McLeod, who established the business in 1985. The company employs 30 people and fabricates and distributes aluminium joinery manufactured by Hamilton-based APL group, the country's largest manufacturer of such products, Bowker said in a statement.
The purchase would expose Caniwi to the coming boom in affordable homes in Auckland and elsewhere in the North Island and give Lancer access to expansion capital, he said.
"Virtually every home is going to have aluminium doors and windows. Companies like Lancer are central to the government achieving its KiwiBuild policy objectives, and with many of these tens of thousands of homes to be built in Auckland, Caniwi is confident that Lancer will be able to play a constructive role in providing top quality windows and doors to new builds."