(Reuters) – Australian buyout firm Pacific Equity Partners (PEP) said it would buy the local arm of British baked goods giant Kerry Group Plc, in a deal a person with knowledge of the matter said was worth about A$250 million ($193 million).
The investment would be the first in the food sector for PEP’s fifth fund. The private equity firm has so far raised A$1.5 billion of the A$2 billion slated for the fund, said the source who was working closely with the transaction but was not permitted to comment publicly.
The Kerry Group’s Australian business, Kerry Pinnacle, sells baked goods like muffins, cakes, donuts and profiteroles, as well as frozen baked goods and ingredients and fillings to 3,500 supermarket and bakery customers, PEP said in a statement.
Despite a record-breaking year of private equity exits in Australia last year, buyout firms are under pressure as volatile equity markets make initial public offerings seem increasingly risky and cheap debt drives up purchase prices.
The food sector, however, has proven successful for Sydney-based PEP as Australian suppliers benefit from growing demand throughout Asia.
In 2014, PEP sold Peters Ice Cream to British dairy giant R&R Ice Cream Plc for a reported A$450 million, doubling its money in two years. It also sold New Zealand snack maker Griffin’s Foods Ltd to Philippine-based Universal Robina Corp for NZ$700 million ($514.3 million), also doubling its money in eight years. ($1 = 1.2952 Australian dollars) ($1 = 1.3611 New Zealand dollars)
(Reporting by Byron Kaye; Editing by Miral Fahmy)