Aussie PE firm to take majority stake in Hellers
By Rebecca Howard
Sept. 25 (BusinessDesk) - Australian private equity firm Adamantem Capital's bid to buy a majority stake in Hellers from Rangatira investments should get a green light from the Overseas Investment Office but may face more scrutiny than it would have previously, says David Pilkington, the chairman of the small goods company's majority shareholder, Rangatira Investments.
Earlier, Adamantem announced plans to invest alongside founder Todd Heller. The deal is conditional on OIO approval in New Zealand and Foreign Investment Review Board approval in Australia.
Pilkington told BusinessDesk there was no sensitive land involved and "historically, Australian buying interest with no sensitive land moved through OIO very quickly".
"I think with the current environment, they are probably taking a closer look at all of these transactions."
The Labour-led coalition has raised the bar for overseas investment, particularly around sensitive land and housing as it looks to protect kiwi interests. "Based on historical precedence, you would expect it to pass OIO," said Pilkington,
He confirmed that Rantagira Investments is selling its total 63 percent interest in the sausage, bacon and ham maker's operation. He declined to give a dollar figure but according to the Australian Financial Review, the deal is thought to be worth around A$200 million.
Rangatira announced in May that it was considering options for the future direction of the business that it first invested in 15 years ago, and had hired investment bank Cameron Partners to help review its business.
Pilkington said it seemed like a "natural juncture" to exit, given the size and success of Hellers.
"It had got to the point, with its own success, that it was becoming an uncomfortable portion of our total investment fund and we have a policy that says we have got to manage risk across the portfolio," he said.
"We would expect to have to invest significant amounts in Australia to grow that business" because of growth opportunities there.
"Adamantem brings a wealth of knowledge, which will help us to scale-up, continue to invest in innovative new products and add further value to our customers," said chief executive John McWhirter.
Wellington investment firm Rangatira increased its stake in Hellers to 63 percent from 50 percent in late 2015, paying $9.5 million for the extra shares, and valuing the investment at $52.2 million at the time. Since then, however, Hellers has expanded. In July, for example, it continued its foray across the Tasman buying Victoria's Moira Mac Poultry for an undisclosed sum and adding A$40 million of revenue to its income stream.
Hellers employs 600 people and produced 30 million kilograms of meat in the year ended March 31, Rangatira said in its annual report. The company's earnings improved in the second half of the year with stricter margin control and a focus on new product development. Rangatira doesn't break out the firm's earnings, but the Australian Financial Review reported previously that Hellers generates annual earnings of $20 million.