TPG Capital extracts bumper $575m dividend from Greencross
TPG Capital received a windfall $575 million dividend from its vets and pets business Greencross last year, new accounts lodged with the corporate regulator show.
This was despite the company, which has more recently counted AustralianSuper and Canadian pension fund HOOPP as shareholders, recording a fall in net profit from $92.9 million to $70 million in the last financial year. Revenues rose to $1.8 billion compared to $1.5 billion in that time.
Greencross chief executive George Wahby told The Australian Financial Review in June that the companies’ top-line sales will reach more than $2 billion next financial year.
TPG brought in Jefferies Australia earlier this in year as it sought to sell the company.
The capital return for the company, which operates the Petbarn brand, comes as the softer economic environment makes it harder for private equity to sell companies. Many are instead finding ways to extract capital returns from their existing portfolio.
Last week, ASX-listed pharmaceuticals and animal goods distributor EBOS failed to close a $3.75 billion takeover of Greencross, which has more than 260 stores and 160 vet clinics.
TPG bought into Greencross in 2019 and refinanced it with a new debt package worth about $1.5 billion in early 2022 when it sold a 45 per cent stake to AustralianSuper and HOOPP, the Healthcare of Ontario Pension Plan.
“On August 16, 2022, the group completed a capital return and dividend to its shareholders out of the net refinance debt proceeds from the prior [financial] year,” the company said in its accounts.
“The group continues to generate significant profits and operating cash inflows. Its current assets exceed the current liabilities by $22.8 million.”
The $575 million dividend compares to the $158.3 million paid to shareholders in the 2022 financial year. In the same month, August last year, Greencross repaid a $444.7 million loan to TPG.
The pet care sector has been one of the outliers in the gloom facing other consumer-facing industries as rising rates and inflation eat into disposable income.
Seventy per cent of Australian households now own a pet, and between 2019 and 2022, dog ownership rose by 25 per cent and cat ownership increased 43 per cent.
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