The dealmakers poised to clinch the biggest year

Article by Sarah Thompson, Kanika Sood and Emma Rapaport courtesy of the Australian Financial Review.

Street Talk A late deals explosion suggests the drought is breaking.

It was a year marked more by failure than success. Growing differences in what buyers and sellers thought assets were worth, spurred on by a higher cost of capital, coupled with economic and geopolitical uncertainty, made the past 12 months a tough environment for deal making.

With plenty of transactions on hiatus, it was a year focused more on portfolio management.

EBOS’ mooted $3.75 billion purchase of TPG Capital’s Greencross vets and pets business is just one example of a stellar deal that would have ordinarily had little trouble completing. And we know of some two dozen (less stellar) transactions privately under discussion that haven’t made it far.

Private capital deal makers had better luck in the public markets. TPG snared funeral services provider InvoCare for $1.8 billion, Bain took over Estia Health, Paine Schwartz nabbed horticultural group Costa, and Pacific Equity Partners swiftly won board approval to acquire Healthia after lobbing a bid at a massive premium for the optometry and podiatry group.

But the drought seems to be ending. In 2024, there’s plenty of dry powder and more pressure to deploy. If inflation continues to normalise, keeping interest rates steady, then acquirers will be more confident of valuations.

For one thing, a wave of private equity secondary sales is expected as impatient investors pester funds to return capital after a dearth of realisations in the past three years. Then there’s the buyout backlog: Navis Capital’s Device Technologies, PAG Asia Capital’s Craveable Brands (the operator of Red Rooster, Oporto and Chargrill Charlie), BGH Capital’s cyber security play CyberCX and KKR’s plumped-up Laser Clinics.

Among the bigger private capital deals floating around in early 2024 will be the EastLink toll roads auction in Melbourne and a sale at Queensland Airports. And with James Giannas’ ICG securing hospitals group Cura, the spotlight is firmly back on core-plus healthcare assets. Keep an eye on Permira’s diagnostic imaging business I-MED Radiology Network, now a $4 billion business.

After four years of ownership, Brookfield must also be kicking around exit ideas for private hospital operator Healthscope.

Meanwhile, there’s plenty of movement among the deal makers themselves. Dominic Emmett, the godfather of special situations and formerly of Gilbert + Tobin, is out on his own and will no doubt have plenty on the cards next year. Skye Capital Partners’ Kelly Morton, The Carlyle Group’s Jay Ditmarsch and EQT’s Frank Heckes are also on track for inclusion in this very list the next time it is published.

In terms of traditional private equity, BGH Capital has had a quiet year, and while Five V’s team is nudging 40 mouths, the deals have been small. Clark Perkins’ Mercury Capital didn’t have a billion-dollar-plus MessageMedia-type sale to crow about, but no doubt this coming year will bring the goods.

Gina Rinehart, on the other hand, has been doing a mean trade, appearing on every major lithium deal as the mining magnate looks beyond iron ore. Unlike the Forrests, who rely on Tattarang chief executive John Hartman to manage their sprawling empire, Rinehart is calling every shot.

And while it will shock no one, it is worth pointing out what a terrible year it has been for investment bankers. Kudos, however, to Emma-Jane Newton, who’s rolled with the boy’s club for a long time and now helms investment banking for Deutsche Bank. JPMorgan’s Kierin Deeming, Julian Peck and Tim Foy have a sensible approach to deploying private capital, as does Barrenjoey’s Jarrod Key.

Rothschild’s sponsors banker, Marc Rubinstein, and Morgan Stanley stalwarts Richard Hershey and Richard Wagner had a stonking end to the year, while Bank of America’s Karl Rozman raked in circa $50 million in revenue over the period. Then there’s ex-UBS banker David Di Pilla, whose HMC Capital had a central role in the Chemist Warehouse deal. There are a few hairs on the $8 billion reverse takeover of Sigma Healthcare, but it wouldn’t have happened without him.

A late December deals explosion has everyone trying to forget about the hard times and cautiously optimistic that 2024 will bring better news.

Our top deal makers for 2024, in no particular order:

Peter Graf, Ares Management

Since landing at Ares in 2021, seasoned Credit Suisse operative Peter Graf has made a name for himself and the $34 billion alternatives giant’s direct lending business Down Under. A few years ago, HPS Investment Partners came in and reshaped Australia’s leverage finance scene with unitranche loans. Now, it’s Ares’ turn. They’re hungry, taking debt on plenty of deals and establishing a beachhead in Australia, led by Graf. This year, he’s landed the firm a leading role on one of the few, if not the biggest, take-privates, lending into TPG’s $1.8 billion takeover of InvoCare. Cosying up to financial sponsors and founders, he’ll seek to drive Ares’ direct lending business across APAC.

John Hartman, Tattarang

It’s unusual for a family investment company to be across such significant operation businesses and new M&A, but that’s where you’ll find former stockbroker John Hartman. Taking the best attributes of private equity and also a family business mentality, Hartman has seized control of Mincor Resources in an epic $760 million deal, turning Wyloo Metals into the largest pure-play nickel business outside Russia, and making Squadron Energy the largest renewable energy business in Australia since digesting CWP Renewables. He’s also morphed Tattarang’s agri-food business Harvest Road into one of the world’s largest vertically integrated beef businesses and proved you can add value to a private equity exit in RM Williams, stitching up a deal to acquire famous hat-maker Akubra. Investing $4.6 billion this year, Hartman is at the centre of Aussie private dealmaking.

Michael Caristo, Genesis Capital

Michael Caristo is bidding for listed dental chain Pacific Smiles Group and gunning hard for healthcare deals with backing from PE’s brightest minds The 37-year-old medical doctor turned private equiteer, and his co-founder Chris Yoo, have leveraged their experience at Crescent Capital Partners to steadily erect a rival healthcare specialist in just five years. We are told peers at the likes of Pacific Equity Partners personally invested in Genesis’ $200 million first fund, and limited partners have informed us a larger fund is in the post by mid-2024. This year, the duo bulked up P3 Research, acquired Life Care Consultants and are now seeking to win over Pacific Smiles’ board.

Vincent Wong, TPG Capital

Who will Joel Thickins, private equity’s golden boy, hire to run his new growth capital fund? That’s the $2 billion question for TPG going into 2024, but one thing’s for sure – his key lieutenant, Vincent Wong, will play a major role at the firm next year. Wong is widely regarded as an expert executor, but what really sets him apart is his skill in underwriting complex investments. This has helped make Novotech and Greencross among the most successful deals for TPG Asia, while others he has been involved in – Funlab and iNova – are also positioned to deliver strong returns. After helping deliver the InvoCare take-private, nobody was surprised to see Wong elevated to the TPG partnership this year – all before the age of 40.

Chris Coates and Louise Haslehurst, Quadrant Private Equity

Hard at the ball, Chris Coates has spent the past 12 months growing Affinity Education (both organically and via the acquisition of Kids Club), while also focusing on the private equity firm’s myHomecare and sewerage contractor Total Drain Group. He was integral to a break-out year at healthy meals producer My Muscle Chef, which is building bigger facilities to increase volume and efficiency. Coates is a deal originator year in, year out, and is not afraid to use his edge to drive an outcome.

Meanwhile, Haslehurst co-led the acquisition of Quantum Security – now Bastion Security, but her baby is Quad Lock, which makes smartphone mounts and cases for bikes and $150 million in annual revenue (three-quarters of which is in America and Europe). Haslehurst is on the board of CancerCare Partners and is an active member of the Australian Investment Council where she’s been influential in driving a range of diversity initiatives.

Joshua Hartz, Bain Capital

Between riding shotgun with Oaktree’s Jarrad Solomons at GenesisCare and raiding Accolade Wines’ debt stack, Joshua Hartz had a cracking year. The special situations deal maker earned his stripes (and partner status) by being among Mike Murphy’s best operators – alongside Charles Lawson – during Bain’s buyout of Virgin Australia. While that IPO didn’t take off in 2023, the airline was recapitalised and is in rude health. Hartz’s deal with Madigan Capital is slated to be part of a broader relationship, and his plan to turn around Accolade is taking shape and could be a masterstroke.

Anna Kilmartin, KKR

KKR lost a few dealmakers this year (and gained a few detractors), but PE head David Lang is 10 steps ahead and sitting on a treasure trove of potential four-times return exits. Anna Kilmartin has been by Lang’s side since his return from London and has proven her smarts and her instincts. Kilmartin’s ability to cut through complexity has set Colonial First State, which continues to win market share from rivals HUB23 and Macquarie, on its way to being a great investment for KKR. Meanwhile, global buyers are snacking on Australia’s No. 1 biscuit maker, Arnott’s, and MYOB is hitting goals, pulling in a heavy-hitter CEO from Adobe and nabbing payroll platform Flare (which has attracted inbound interest all on its own). On the exits front, KKR called last drinks on Australia Venue Co and sold Australian carbon projects group GreenCollar to a Canadian pension giant. Spare a thought for the juniors who won’t be getting much of a Christmas break with a few live deals in the hopper.

Nik Kemp, AustralianSuper

Sitting atop a newly formed $50 billion-plus property and infrastructure portfolio, Nik Kemp is one of the biggest names in private capital. He commands a huge portfolio and can count on massive inflows. Everyone wants to be close to Kemp. This year, Kemp broadened the country’s largest super fund away from its local-heavy toll road/airport/electricity network mix, gaining a $2.5 billion minority stake in major European data centre owner Vantage Data Centres.

Andrew Charlier, Pacific Equity Partners

Here’s a firm at the forefront of private equity in Australia. And, with its depth of talent working under founders Rickard Gardell and Tim Sims, it’s difficult to pick a 2023 winner. Andrew Charlier, who oversees the tearaway Secure Assets Fund with Evan Hattersley, is now running almost as much money as the traditional buyout team, which is led by star turns Tony Duthie, David Brown and Shannon Wolfers. Much is made of SAF’s marquee investment in Intellihub, but its WINconnect bet has been the quiet achiever, making close to eight times investors’ money.

Todd Barlow, Washington H. Soul Pattinson

Speaking at a conference in September, Soul Patts chairman Rob Millner said the investment firm controlled by his family would be going after private markets – and he wasn’t kidding. This year, the company, which holds names such as Brickworks and TPG Telecom, has ploughed nearly $1 billion into the asset class. While its bid for Perpetual won’t be forgotten quickly, Barlow has made a series of bolt-on acquisitions for Soul Patts portfolio companies Aquatic Achievers, Ironbark and its sprawling agriculture and water group. He’s also been busy with portfolio manager Dean Price in private credit, writing cheques for Bis Industries and Infrabuild. Plus, with New Hope on the books, Barlow can do coal deals. There aren’t many funds that have the freedom to do that these days.

Ani Satchcroft, Macquarie Asset Management

Macquarie’s golden girl is still on top of her game. It hasn’t been the busiest year for the bank’s asset management division – renamed from MIRA – but it is hard to talk about private capital in Australia without mentioning Ani Satchcroft. MAM has grown under her watch, leading the firm into major telco infrastructure deals – Axicom, Vocus Group and IPO-candidate AirTrunk – and everyone in the market is struggling to keep up. She’s decisive, personable and knows how to keep her advisers honest.

Mark Chudek, Affinity Equity Partners

Mark Chudek may be the only dealmaker that Quadrant Private Equity’s Chris Hadley has been sorry to let go of. Fresh off leading Affinity’s tilt at VetPartners, Chudek has made a name for himself in mid-market and large-cap private equity dealmaking circles. His fingerprints are on a string of entries and exits including small goods maker Primo Foods, Virgin’s Velocity Frequent Flyer, GP software group MedicalDirector and South Korea’s top recruitment portal JobKorea. Why do people like him? He’s a hustler, a deal originator and a creative thinker. Watch out for Chudek in 2024, deploying Affinity’s $6 billion war chest alongside new Australia head Nick Speer.

Beau Dixon, Anchorage Capital Partners

Whipping 185-year-old retail icon David Jones into shape has kept Anchorage’s Beau Dixon busy, but he and fellow managing partners, Callen O’Brien and Simon Woodhouse, have also had their ears to the ground for new opportunities. Rubber hit the road in October when Dixon and Woodhouse teamed up with listed radio player ARN Media to launch a bid for Southern Cross Media. The team, which includes founder Phil Cave and director Ben Ware, also ruled off the firm’s fourth fund, exceeding its $500 million target.

Luke Edwards, Brookfield

Luke Edwards runs Brookfield’s renewables strategy. Yes, the Canadian giant missed out on Origin Energy, but it has raised a giant transition fund and is going to spend it here. Plus, there’s plenty of political goodwill towards Brookfield. We reckon its run-in with AustralianSuper was more bad luck and bad timing than anything else. Edwards will get a second chance to be a major player in Australia’s energy sector.

Alex Kauye, Gilbert + Tobin

With King & Wood Mallesons’ private capital co-head Mark McNamara off to a sabbatical for most of this coming year, the door is wide open for the firm’s two biggest rivals – Allens and Gilbert+Tobin – to steal market share. At the latter, look no further than Alex Kauye and debt whiz Gail Christopher, whose Rolodexes are chock-full of top private equity firms. Kauye’s straight-shooting advice is sought after by KKR and TPG. He’s highly commercial, and has the ability to simplify and solve complex issues across many facets of a deal. Under the watchful eye of Peter Cook, Kauye and Christopher are Gilbert+Tobin’s calling card for a huge slice of private capital dollars.

Stuart Wardman-Browne, IFM Investors

While IFM’s infrastructure grandees lay low last year, their private equity colleagues led by Stuart Wardman-Browne signed four new investments, two bolt-ons and an exit. Ex-Commonwealth Superannuation Corporation dealmaker Adrian Kerley spearheaded the team’s biggest buyout yet, finalising a deal to buy PRP Diagnostic Imaging for circa $800 million, while limited partners say David Odgers secured an eye-watering 11-times exit at My Plan Manager. The team has branched out from mid-market deals to bigger bets and has plenty of friendly institutional backers to keep going. Investment director Daniela Wegner is flagged as a future partner, while Kerley’s bet on Payapps is tipped to be the team’s big exit for 2024.

Tom Story, Allens

Hands down, one of three go-to legal advisers for private capital in Australia. Tom Story and his team advised Nitro Software in its $530 million takeover by Potentia Capital and helped Paine Schwartz Partners win a scheme bid for Costa. His team was also on hand to assist two fund manager clients, Pacific Current Group and PM Capital, on their approaches from Phil King’s Regal, among others. Story’s team includes Kounny Rattley, along with former alumni of this list, Emin Altiparmak, who’s hardworking and relentless, and Noah Obradovic, viewed by rivals and colleagues as the quintessential PE lawyer.

Fay Bou, Allegro Funds

Allegro’s carve out of PwC Australia’s scandal-hit government consulting unit was the business story of the year, and Fay Bou was the dealmaker calling the shots alongside co-founder Adrian Loader. Bou is Allegro’s numbers guy, while Loader ironed out the deal structure. Bou has been with Allegro since 2015 and has had his biggest year yet: a big exit at Best & Less, a talk-of-the-town investment in Scyne, and a promotion to boot. Now that he’s a partner alongside Loader and Chester Moynihan, Bou will have more capacity to take big swings and bring his outside-the-box thinking to deal making.

Chloé Brayne, CDPQ

The Quebec-based pension fund hasn’t done much in 2023, pumping $200 million into a new sustainable farming platform alongside the Clean Energy Finance Corporation. But Brayne was considered a major loss when she walked to CDPQ from AustralianSuper and she’ll be keen to prove that this year. We’re also keeping an eye on Jan Brand and Ilan Sadeh at Toronto-headquartered Ontario Teachers’ Pension Plan. The pair have been stealthily building up their local book and are invested in Spark NZ’s TowerCo and Connexa, also in New Zealand.

Jarrad Solomons, Oaktree Capital Management

Oaktree’s country head Byron Beath might be the highest-profile local deal maker at the storied investment outfit, but Jarrad Solomons has come into his own over the past 12 months, crafting a tough deal at bankrupt cancer care group GenesisCare. Very few would have managed to navigate such a complex situation, which involves regulators, doctors – and investors. Solomons would more often than not be the smartest person in the room, but he’s also understated and not one to intimidate with his intelligence. He’s likeable, thorough and across all the details.