- Sydney private equity business CHAMP took an 80% stake in the Constellation Brands wine business for $290 million in 2011.
- It expanded operations in Europe and Australia, focusing on New World wines.
- After buying Australian premium wines business Fine Wine Partners from Lion last year, it began looking for a possible IPO or exit.
- US-based buyer The Carlyle Group has nearly $US200 billion invested globally.
CHAMP Private Equity is selling its Accolade Wines venture for $AU1 billion to US private equity giant The Carlyle Group.
The deal matches the price CHAMP was believed to be seeking for the business when it began exploring a possible IPO last year.
Since acquiring an 80% stake in two separate Constellation Brands divisions for $AU290 million in 2011 to create Accolade, CHAMP has taken the business from break-even to an EBIT of around $100 million this financial year.
Washington-based The Carlyle Group, which has $195 billion of assets under management globally, across 317 investment vehicles, will pay $1 billion for the CHAMP III Funds 80% stake, along with the 20% share owned Constellation Brands, Inc, to take total control.
Accolade is now the country’s largest producer of Australian wine, exporting to more than 140 countries, and one of the world’s top five wine companies. It exports more than $350 million in Australian wine annually.
Hardys, Houghton, Tasmanian premium sparkling Arras, Leasingham and cask wines Banrock Station, Stanley and Berri Estates are part of the portfolio. Last year CHAMP spent an estimated $100 million adding the Lion-owned premium wine business Fine Wine Partners (FWP) to the Accolade portfolio. FWP delivered four prominent Australian wineries: Petaluma/Croser, St Hallett, Knappstein, and Stonier, as well as the Tatachilla brand.
The New Zealand brands include Mud House and Waipara Hills, while in the UK, it’s the iconic alcohol brands Babycham and Stone’s Ginger Wine.
Two years ago Accolade spent $AU15 million on a new bottling plant in Bristol, England. A $40 million bottling and warehouse facility at the Berri winery in South Australia to target the burgeoning Asian market is due to open next year.
Together they are the largest bottling, packaging and distribution centres in both Europe and the Southern Hemisphere.
CHAMP Private Equity CEO Mr John Haddock said they bought the business in 2011 because there was an opportunity, but a lot of work and time was needed.
“The wine industry has long cycles so we knew we had to commit to a longer hold in order to realise that opportunity,” he said.
“The two divisions CHAMP acquired had separate strategies, separate management, operated out of Australia and the UK and were even on separate IT systems. Firstly, we had to bring the two divisions together to create one business.”
Haddock said there was a deliberate focus on New World wines in 51 brands that span Australia, New Zealand, South Africa, the United States and Chile.
The CEO cites the rejuvenation of the famed Hardys brand, founded in South Australia in 1853, among his proudest achievements.
“I know Sir James and Bill Hardy are very pleased with the renewed trajectory that their family’s heritage brand is taking and since Accolade’s acquisition of Grant Burge, sales have increased by more than 80%,” Haddock said.
“CHAMP is proud to have been the custodian of so many widely respected brands, to have contributed to the great Australian wine industry and to have added export value to Australia. We are very pleased that a global firm of such experience and capability as The Carlyle Group will now take Accolade forward.”
The company, co-founded by Bill Ferris (chair of the Turnbull government’s Innovation and Science Australia Board) with Joe Skrzynsk in 2000 as the evolution of a partnership that began in 1987 with the country’s first fully institutionally funded private equity fund, has now invested around $3.5 billion in more than 90 ventures, including Pepperstone, Containerchain, Strait NZ, Dutton Garage, Jaybro, Axieo and Shelf Drilling.
Exits have included Sheriden, Austar, Bluestar, Alleasing, Healthcare Australia and oOh!Media.
Haddock says the seven-year investment in Accolade is a benchmark for private equity execution.
“Accolade represents the best of private equity ownership: taking the time to develop a business, investing in multiple areas of the business and orientating the company towards a growth opportunity that has many years ahead of it,” he said.
Carlyle Group is expected to focus on the burgeoning Asian market with its latest investment.