By Asian Venture Capital Journal
Affinity Equity Partners has agreed to acquire Australia-listed debt and trade finance provider Scottish Pacific in a deal worth approximately A$612 million ($446 million).
The pan-regional private equity firm, which closed its fifth fund earlier this year at $6 billion, will pay A$4.40 per share in cash via a scheme of implementation, according to a filing. This represents a 17.6% premium to Scottish Pacific’s closing price on September 19, after which trading was halted pending the announcement of the deal. As of late morning trading on September 24, the stock was up more than 15% at A$4.31.
Each member of Scottish Pacific’s six-strong leadership team, which hold a collective 3.2% interest, has confirmed they will vote in favor of the scheme. Patrick Elliott, the company’s chairman and a founding partner of Next Capital, its previous owner, added that the cash offer “provides value certainty for shareholders.”
Founded in 1988, Scottish Pacific works with business owners that need financing to support expansion, boost working capital and daily cash flow, and make acquisitions. Its debtor and trade finance services range from corporate credit lines and bad debt protection to credit lines for imports and multi-level supply chain finance solutions. Debtor finance accounts for 95% of the company’s loan exposure and it claims to have a 20% share of the Australian market in this segment.
Scottish Pacific’s loan book stood at A$830.1 million at the end of the 2017 financial year, up 11.3% on the previous 12 months. Over the same period, revenue rose from A$27.1 million to A$100.3 million, while net income jumped from A$100,000 to A$20.4 million.
Next and IFM Investors supported a management buyout of the company from Lazard Australia Private Equity in 2013. This was followed by expansion initiatives such as the acquisition of the Australia and New Zealand operation of Bibby Financial Services – then Scottish Pacific’s second-largest independent competitor in Australia – and the purchase of debtor finance businesses from GE Capital and Suncorp-Metway.
Scottish Pacific went public in July 2016, raising A$293.5 million in its IPO and facilitating a partial exit for Next. The private equity firm subsequently pared its stake through several block trades, completing a final exit in March.