Growth fund Anacacia Capital has signed the year's first Australian private equity deal, agreeing terms for a majority stake in privately owned fire sprinklers and alarm systems business Force Fire.
Street Talk understands Anacacia Capital will invest in Sydney-based Force Fire alongside the company's founders and senior management team, and hopes to capture a greater share of the $2.4 billion a year national fire and security alarm installations market.
Force Fire designs, installs, maintains and repairs fire safety systems in New South Wales, including for day care centres, nursing homes and shopping malls.
The company had about $50 million annual sales last year,and employs about 100 staff and another 30 contractors.
Force Fire executive directors and owners Paul Gatt and Paul Richetti are expected to continue to lead the business as part of the private equity investment, and will each retain a meaningful stake in the company.
It's understood the deal was signed in recent days.
Anacacia Capital is expected to help fund and execute a growth strategy, which includes capitalising on Force Fire's footprint as one of the biggest fire protection businesses in Sydney to grow nationally.
The national fire and security alarm installation services market is worth $2.4 billion a year according to IBISWorld data, and is highly fragmented. The two biggest players - Wormald & ADT Australia and UTC Australia's Chubb United Technologies - together account for less than 20 per cent of the market.
The other part of the investment thesis is believed to be heightened awareness and regulatory scrutiny on fire safety and fire protection measures.
Accounting firm HLB Mann Judd and law firm Addisons advised Anacacia Capital, while Fire Force's existing shareholders were advised by K&L Gates.
The acquisition comes as Anacacia Capital readies investors for a new fund, which its existing limited partners expect to launch in coming months.
The private equity firm is likely to target $250 million to $300 million for its Fund III, which would be more than its existing fund.
Anacacia Capital typically buys or invests in profitable businesses with $20 million to $250 million annual revenue. Its former investments include the now listed global language technology company Appen and timber products business Big River Industries, as well as heights safety business RISsafety and baby food company Rafferty's Garden.
The manager is best known for its first fund, which was named as Australia's best ever performing buyout fund by private equity data firm Prequin. It also runs a listed microcap investment vehicle, the Wattle Fund.
The Australian Financial Review - 15/1/18