A syndicate led by ex-Anchorage Capital Partners investment director Jesse Alderton has acquired the Australia and New Zealand operations of technology hardware equipment rental business Hire Intelligence International.
The value of the transaction has not been disclosed but is likely to have been $10 million to $15 million.
Hire Intelligence has been established more than 30 years and in Australia and New Zealand dominates a niche market of supplying technology hardware short-term for special events. For example, the company has a contract with the NSW Education Department to provide laptops for HSC examination centres. The local operation has a total of more than 2,000 corporate and government clients.
Alderton left Anchorage in May. Over about five years with the Sydney private equity firm he played key roles in various transactions including the acquisition of ELF Group and was on the investment teams for investments in David Jones and GBST.
Alderton said he expected Hire Intelligence to be the first of many acquisitions he would make independently, but rather than trying to raise a fund or seek substantial co-investment backing he had decided to follow the search fund route to identify a single investment to focus on first.
“While I’ve got experience in private equity investing, I didn’t expect investors to back me with substantial capital,” he said. “This deal is a typical management buyour, supported by sophisticated acquisiton capital.”
According to Alderton, from an execution standpoint, the present is the perfect time to be pursuing a search fund strategy as we are at the intersection of complimentary market developments:
- A large volume of cash generative great family businesses being exited at once.
- Significant availability of private capital seeking better returns than can be offered by more mature private equity firms.
- Increasing relevance and availability of private credit as banks pull back from providing acquisition finance because of regulatory restrictions.
“These factors haven’t co-existed before and I expect it will drive the origination of several new firms seeking to capitalise on this once-in-a-generation wealth transfer opportunity,” he said.
Alderton believes businesses too small to be of interest to established private equity firms represent special opportunities.
“These businesses can be bought at low single-digit multiples of earnings,” he said. “Private equity firms see five-times earnings as a steal and these businesses are going for less than that.”
Alderton’s acquisition vehicle made the corporate carve-out acquisition with debt financing provided by Longreach Credit Investors.
Hire Intelligence has been majority-owned by Tom Crage, now in his 80s, since 1996 and was listed on the ASX until 2013. Hire Intelligence International retains the UK and Ireland operations of the business.
Image: Jesse Alderton.