Australia: GrainCorp’s last and final pitch for malt business getting some traction
GrainCorp bankers' last and final pitch for the company's malt business is getting some traction, The Australian Financial Review reported on July 8.
According to local media, a bunch of private equity heavyweights are crawling over the A$2 billion-odd unit - and one of the more interested parties is US$80 billion-odd global private markets investor Partners Group.
It is understood Partners Group has a team of people looking under the bonnet, trying to work out whether it can hit GrainCorp's asking price which is believed to be about 12-times earnings.
Sources said Partners - and others circling the malt arm - were in bilateral talks with GrainCorp and its bankers, and there was no formal process or bid timeline or particular trigger point in site.
Of course the natural termination date is later this year when GrainCorp is scheduled to spin-off the unit to its shareholders. GrainCorp's CEO and chairman are both set to jump to the MaltCo, under the demerger plans. A scheme booklet is due out following GrainCorp's full-year results in November.
The question is whether Partners Group - or any other potential acquirer - can hit what GrainCorp and its bankers at Credit Suisse and Macquarie Capital think malt is worth, plus a control premium. And also whether the bid could be good enough to overcome tax implications from such a bid, as it would crystallise the substantial gain GrainCorp has made from its time in malt.
It would also be a big move for Partners Group, which is a big name in buyouts offshore but is yet to take on anything of the scale of MaltCo in Australia. Partners Group's private equity deals in this market include childcare centre owner Guardian Early Learning.
GrainCorp's proposed MaltCo would be the world’s fourth-largest independent maltster with assets in Australia, the United States, Canada and the United Kingdom. It made A$170 million EBITDA in the 2018 financial year.
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