Brits lead the way in Aussie deals

THIS year is shaping up as the best ever for private equity deals in Australia, and two British-owned groups have been setting the pace.

Catalyst Investment Managers, a unit of insurance giant Prudential, and an affiliate of Britain's CVC Capital Partners have been the two biggest players as private equity deals seem likely to top A$2bn (£724m) this year for the first time.

Catalyst and CVC Asia, a joint venture between CVC, headed by chairman Mike Smith, and Citigroup of Hong Kong, have also joined forces and are poised to complete Australia's largest private equity deal, the A$750m purchase of the Pacific Brands division of faltering conglomerate Pacific Dunlop.

The partners have exclusivity on negotiating with Pacific Dunlop, and the deal is expected to be announced within weeks. 'It has certainly been the busiest year for private equity both in terms of volume and also in terms of value,' said Gordon Windeyer, a Catalyst director. 'I think this year we will see as many as eight buyout deals of A$100m or more, while last year there was only one.'

Catalyst also participated in Australia's first privatisation deal earlier this year, paying A$107m for leading clothing retailer Just Jeans, and picked up an Australian garage doors business for A$48m. The private equity group was purchased by Prudential in 1998, and uses funds raised from Australian institutions and superannuation managers as well as money raised by its British parent.

CVC has also been active in other sectors of the economy, and has reportedly bid A$700m for the water-heaters division of Southcorp Holdings, which is transforming itself from a conglomerate focused on white goods into a wine producer and global distributor.

Neil Broekhuizen, an Australian director of former NatWest unit Bridgepoint Capital, said the weakness in the public market has created the opportunity for private equity. 'Vendors have now seen that private equity business is a real buyer of companies and is able to buy quite significantly-sized businesses, and that has obviously coupled with a downturn which has halted the public market,' he said.

Catalyst's George Windeyer also attributes the boost in private equity activity to new strategies from companies, which are focusing on core businesses as a result of the downturn and are moving to divest non-core assets. 'Australian corporates don't go for things on the periphery of their core activities - they are much more likely to buy offshore,' he said. 'It has all produced a decline in demand by corporates to buy businesses, while we - by our very nature - are perpetual buyers of businesses while the public markets only do it at certain points.'