Quadrant PE puts Superior Foods back on the menu
Tis the season for private equity sales. Street Talk understands Quadrant Private Equity is seeking buyers for long-held food service business Superior Food Group.
Sources said Quadrant and its advisers at Stanton Road Partners have started soft-sounding buyout firms, hitting up big sponsors like Bain Capital and Blackstone and pitching Superior Food as a defensive opportunity.
Quadrant’s Superior Food Group counts fast food giants Domino’s, Hungry Jack’s and Baskin-Robbins among its customer base. Luis Enrique Ascui
A typical two-tranche sale process is expected to get underway in the first quarter, with sale documents in front of private equity and selected trade after Australia Day.
Prospective buyers have been told the business, which supplies ingredients, packaging and cleaning items to restaurants, cafes and aged care homes, is on track to make EBITDA in the 2025 financial year of around $55 million. That would imply a sale price north of $500 million, based on recent transaction multiples.
This is the third time Quadrant has shopped Superior Food around – the first in 2021 after the competition regulator decided to approve Woolworths’ entry into the sector via PFD Food Services and again in 2022, asking banks to pitch for a potential initial public offering. However, both processes were interrupted by COVID-19 and associated lockdowns and then the war in Ukraine.
Woolworths took a $552 million chunk of PFD in 2020 about 11 times PFD’s pre-COVID-19 earnings of $57 million. The supermarket giant has managed to grow sales 28 per cent thanks to diversifying its customer base and winning new business, Woolworths told investors at its full-year results in August. The other big player in the space is Bidfood Australia
An exit would end Quadrant’s eight-year association with Melbourne-based Superior Food. The buyout firm bought in in August 2015, soon merging it with Sydney’s NFD Food Services to create the third-biggest food services group in Australia. Its clients include fast-food restaurants like Domino’s, Hungry Jack’s and Subway and corporates like the Royal Automobile Club of Victoria (RACV) and Health Purchasing Victoria.
Superior founders Craig Phillips and Michael Jeffs, who started the business 25 years ago selling food out of a single truck, are still around – Phillips as chief executive and Jeffs as managing director.
Australia’s wholesale food service sector has been a happy hunting ground for private equity. Hot on the heels of snapping up majority stake in the Boost Juice and Betty’s Burgers chains, Adamantem invested in wholesale food packaging supplier PAC Trading.
Meanwhile, private equity bigwig PAG Asia Capital, best known in Australia for owning Oporto and Red Rooster parent Craveable Brands, acquired Patties Foods and Vesco Foods and Five V Capital took a 30 per cent stake in Australian born-and-bred packaging brand BioPak.
The mooted auction is also expected to target international players who have form in the sector. Of note, Blackstone led a $US1.3 billion buyout of food distributor Performance Food Group in 2008, which it took public in 2015 through a $1.9 billion IPO.
Elsewhere, Bain Capital took a stake in food service packaging business Imperial Dade in 2019, and has since grown revenue to $US5 billion from $US2 billion and completed 26 acquisitions.
Finally, KKR completed a $7.1 billion acquisition of food distributor US Foods in 2007, and following a failed attempt to sell the business to Sysco Corp, listed it on the NYSE in 2016.
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