Pacific Equity Partners

{{Short description|Australian private equity investment company}} {{Use Australian English|date=March 2017}} {{Use dmy dates|date=July 2022}} {{Infobox company | name = Pacific Equity Partners | logo = Pacific Equity Partners (logo).png | logo_size = 180px | logo_alt = | image = Deutsche Bank building - Sydney.jpg | image_caption = Headquarters at [[Deutsche Bank Place]], Sydney | type = [[Proprietary company|Proprietary limited company]] | founded = {{start date and age|1998}} | founders = {{ubl|Rickard Gardell|Paul McCullagh|Simon Pillar|Tim Sims}} | location = [[Sydney]], Australia | industry = [[Private Equity]] | products = {{ubl|[[Private equity fund]]s | [[Leveraged buyout]]s}} | aum = {{AUD|14 billion|link=yes}} (2025) | homepage = {{URL|https://www.pep.com.au}} }}

'''Pacific Equity Partners''' ('''PEP''') is a [[private equity]] investment firm focusing on transactions in Australia and New Zealand. PEP invests across a range of industries and sectors, in turnaround and [[growth capital]] transactions. By 2023, ''[[The Australian Financial Review]]'' reported PEP to be Australia's largest private equity firm.<ref name="afr.com">{{Cite web |date=2023-10-30 |title=PEP prepares biggest fund to date, pitches proven money-making prowess |url=https://www.afr.com/street-talk/pep-prepares-biggest-fund-to-date-pitches-proven-money-making-prowess-20231030-p5eg33 |archive-url=https://archive.today/20231030120020/https://www.afr.com/street-talk/pep-prepares-biggest-fund-to-date-pitches-proven-money-making-prowess-20231030-p5eg33 |archive-date=2023-10-30 |access-date=2024-02-23 |website=Australian Financial Review |language=en}}</ref>

It is also said to be Australia's oldest private equity company.<ref name=":1" /> The firm, based in [[Sydney]], was founded in 1998 by Rickard Gardell, Paul McCullagh, Simon Pillar and Tim Sims. All but McCullagh previously worked together as executives at [[Bain & Company]].<ref>{{cite web |title=Australia's Private-Equity Deals for the New Year |url=https://www.wsj.com/articles/SB10001424127887324669104578206910160290842 |access-date=15 June 2022 |website=Wall Street Journal}}</ref><ref>{{cite web |last1=Wilson |first1=Drew |title=Privately Speaking: Tim Sims of Pacific Equity Partners |url=https://www.privateequityinternational.com/privately-speaking-tim-sims-of-pacific-equity-partners/ |access-date=15 June 2022 |website=Private Equity International}}</ref>

PEP has generated several buyout funds for investors. By 2022, these funds had $8.6 billion under management.<ref>{{cite news |last=Thomson |first=James |date=2 May 2022 |title=PEP's $10b moment heralds private equity's new era |url=https://www.afr.com/chanticleer/pep-s-10b-moment-comes-amid-private-equity-s-new-era-20220430-p5ahgi |work=[[Australian Financial Review]]}}</ref> By 2025, these funds had $14 billion under management.<ref name=":0">{{Cite web |last=O'Dowd |first=Cliona |date=2025-03-10 |title=Pacific Equity Partners to widen its Gateway fund to advised investors and not just the wealthy |url=https://www.theaustralian.com.au/business/financial-services/pacific-equity-partners-to-widen-its-gateway-fund-to-advised-investors-and-not-just-the-wealthy/news-story/5c3aa3d04b7f290a9360d49dc01de50f}}</ref>

==Investments== [[File:Mizone.jpg|thumb|256x256px|Frucor, who now produce Mizone drinks, was the first investment made by the firm.]]Since its establishment in 1998, the firm is understood to have completed 40 private equity buyouts by 2023.<ref name=":1">{{Cite web |date=2023-07-30 |title=The 'apprenticeship' culture that drives Australia's biggest PE firm, Pacific Equity Partners |url=https://www.afr.com/chanticleer/the-apprenticeship-culture-that-drives-australia-s-biggest-pe-firm-20230724-p5dqw5 |archive-url=https://archive.today/20230730122425/https://www.afr.com/chanticleer/the-apprenticeship-culture-that-drives-australia-s-biggest-pe-firm-20230724-p5dqw5 |archive-date=2023-07-30 |access-date=2023-09-14 |website=Australian Financial Review |language=en}}</ref> Apart from buying and operating large companies, PEP has made 100 "bolt-on" acquisitions in the same 25-period, these are smaller firms, bought and merged with portfolio companies, for their strategic value.<ref>{{cite web |last1=Mendoza |first1=Carmen |title=Pacific Equity Partners on why the Australian mid-market is thriving |url=https://www.privateequityinternational.com/australia-mid-market-private-equity-pacific-equity-partners/ |website=Private Equity International |publisher=PEI Media}}</ref>

PEP claims to have "at least doubled" investor monies in 12 of its previous 13 deals, which have included the purchase, restructure and resale of several Australian and New Zealand companies such as Spotless, Hoyts and Frucor.<ref name=":1" /><ref>{{Cite news |last=Cole |first=BRETT |date=24 February 2014 |title=PEP yet to ask banks for Spotless pitches |url=https://www.theaustralian.com.au/news/pep-yet-to-ask-banks-for-spotless-pitches/news-story/8d94a6a22ed532b5058a25f4d939b572 |work=The Australian}}</ref> The one business in this set that did not double its value was [[Patties Foods|Patties]], being resold at a multiple of 1.7, due to low post-Covid earnings for that food group.<ref>{{Cite news |last=Carter |first=Bridget |date=2 February 2022 |title=Pandemic takes toll on consumer goods deals; Patties sale pushed back |url=https://www.theaustralian.com.au/business/dataroom/pandemic-takes-toll-on-consumer-goods-deals-patties-sale-pushed-back/news-story/ce5bc1543ce9dfb662a3ceca64a3dd5f |access-date=14 September 2023 |work=The Australian}}</ref><ref name=":7">{{Cite web |date=2024-04-19 |title=PEP flags $1.5 billion-plus first close for Fund VII raise |url=https://www.afr.com/street-talk/pep-flags-1-5-billion-plus-first-close-for-fund-vii-raise-20240418-p5fkru |access-date=2024-06-12 |website=Australian Financial Review |language=en}}</ref>

== History == [[File:Deutsche Bank Place (30855148452).jpg|thumb|369x369px|Pacific Equity Partners is based in Deutsche Bank Place, close to Sydney Harbour]] Pacific Equity Partners was founded in Sydney, Australia, in 1998.<ref>{{Cite web |date=2022-05-03 |title=This float could create Australia's first private equity billionaire |url=https://www.afr.com/street-talk/pep-fundraising-push-paves-path-to-potential-ipo-20220503-p5ai1k |access-date=2023-10-18 |website=Australian Financial Review |language=en}}</ref> The founders came from the consulting and banking sectors: Rickard Gardell, Tim Sims, Simon Pillar all from [[Bain & Company]]; and Paul McCullagh, from [[Salomon Brothers]].<ref name=":2">{{Cite news |last1=Glascow |first1=Will |last2=Lacy |first2=Christine |date=21 December 2017 |title=Paul McCullagh steps back at Pacific Equity Partners |url=https://www.theaustralian.com.au/business/margin-call/paul-mccullagh-calls-it-a-day-at-pacific-equity-partners/news-story/8a634bbbafbc692b38e755a52e414f78 |archive-url=https://archive.today/20230508052247/https://www.theaustralian.com.au/business/margin-call/paul-mccullagh-calls-it-a-day-at-pacific-equity-partners/news-story/8a634bbbafbc692b38e755a52e414f78?amp&nk=69c9c15895fcc3210dd260d5962eaf4b-1683523376 |archive-date=2023-05-08 |work=The Australian}}</ref>

The company's NZ$50 million deal to purchase [[Frucor]] was partially funded by [[Bain Capital]]<ref name=":8" /> and helped by [[Mitt Romney]], who worked for Bain Capital at the time.<ref>{{cite web |last=Bennet |first=Michael |date=2012-11-19 |title=PEP's machine hits top gear |url=https://www.theaustralian.com.au/business/companies/peps-acquisition-machine-hits-top-gear/news-story/a60436f2e888fd19dd9789a043ff3021?amp |archiveurl=https://archive.today/20251231041818/https://www.theaustralian.com.au/business/companies/peps-acquisition-machine-hits-top-gear/news-story/a60436f2e888fd19dd9789a043ff3021?amp |archivedate=2025-12-31 |website=The Australian}}</ref> This became A$300 million for the company's first fund. Pacific Equity Partners sold half of their Frucor stake at an initial public offering, valuing the company at NZ$200 million. The remaining half was sold to [[Danone]] at a valuation of NZ$300 million. PEP investors made over 10 times a return on their investment in the deal.<ref name=":8">{{cite news |title=The new faces of capitalism |last=Macfie |first=Rebecca |date=2007-02-05 |work=New Zealand Herald |pages=The Business 7–10 |access-date=2025-12-31 |url=https://www.pressreader.com/newspapers/n/the-new-zealand-herald/20070205 |via=PressReader}}</ref>

In two early deals with New Zealand–based Frucor (1998) and Vertex plastics (2000–2002), within months following an initial public offering, the companies lowered profit targets and saw share prices initially fall, until recovering after a subsequent takeover. The New Zealand Herald wrote that Vertex "remains a public relations headage for the firm".<ref name=":8" />

The New Zealand Herald in 2007 reported favorable reviews of PEP's management style from leaders of companies that it had taken private, including from Guardian Healthcare, Communications Group, [[Tegel Foods]], and [[Griffin's Foods]]. According to them, PEP was focused on long-term revenue growth and profitability for the involved companies, and not on "financial wizardry".<ref name=":8" />

In 2008, PEP Fund IV closed with $2.7 billion in equity capital.<ref>{{cite web | title = PEP contemplates more IPOs | url = https://www.theaustralian.com.au/business/business-spectator/pep-contemplates-more-ipos/news-story/48b56a7ef75a40ebaa3814e9eb17d119?amp | date = 2013-11-10 | archiveurl = https://archive.today/20251231045205/https://www.theaustralian.com.au/business/business-spectator/pep-contemplates-more-ipos/news-story/48b56a7ef75a40ebaa3814e9eb17d119?amp | archivedate = 2025-12-31 | website = The Australian}}</ref>

In 2006, PEP and Unitas Capital purchased a majority stake in New Zealand–based Independent Liquors for NZ$1.2 billion on a A$600 million equity investment.<ref name=":10">{{cite web |last=LaFrenz |first=Carrie |date=2026-01-02 |title=Asahi snaps up Independent |url=https://www.afr.com/companies/retail/asahi-snaps-up-independent-20110818-i4bly |archiveurl=https://archive.today/20260102050241/https://www.afr.com/companies/retail/asahi-snaps-up-independent-20110818-i4bly |archivedate=2026-01-02 |website=Australian Financial Review}}</ref> PEP had a 43.9% stake.<ref name=":11" /> In 2011, [[Asahi Breweries]] purchased Independent Liquors for NZ$1.5 billion.<ref name=":11">{{Cite magazine |last=Ferguson |first=Nick |date=September 2011 |title=Asahi buys Independent Liquor |url=https://www.financeasia.com/article/asahi-buys-new-zealands-independent-liquor/267382 |magazine=FinanceAsia |pages=24–25}}</ref> PEP made about 1.5 times their initial investment.<ref name=":10" /> In 2013, Asahi sued PEP and the other sellers, alleging deceptive conduct that overvalued the sale. The case was settled with a A$199 million payment from PEP, Unitas, and their insurers to Asahi.<ref>{{Cite news |last=Mitchell |first=Sue |date=2014-11-18 |title=Asahi wins $199 million settlement over Independent Liquor deal |url=https://www.smh.com.au/business/asahi-wins-199-million-settlement-over-independent-liquor-deal-20141117-11oa5x.html |work=Sydney Morning Herald |pages=Business 9}}</ref>

In 2015, PEP raised PEP Fund V for {{Currency|2,100,000,000|AUD}}. It exited in 2023 and earned investors a 100% return. The fund made and realized eight profitable investments in eight years, an unusual feat.<ref name=":1" />

In 2017, co-founder McCullagh left the partnership but remained at the firm as an adviser.<ref name=":2" />

In 2017, PEP took legal action against private equity firm Adamantem Capital, claiming that its founders, former PEP employees, used confidential information at their new company. The legal action was denied and the court ruled that PEP must pay all legal costs.<ref>{{cite web |title= One in the eye for PEP richies | url = https://www.theaustralian.com.au/business/margin-call/one-in-the-eye-for-pep-richies/news-story/ebff346118cc681f05fe9b71d3624ef6?amp | date = 2017-09-29 | archiveurl = https://archive.today/20251125053131/https://www.theaustralian.com.au/business/margin-call/one-in-the-eye-for-pep-richies/news-story/ebff346118cc681f05fe9b71d3624ef6?amp | archivedate = 2025-11-25 | website=The Australian | last1=Glasgow | first1=Will | last2=Lacy | first2=Christine}}</ref>

In 2020, PEP raised A$2.5 billion for PEP Fund VI.

In 2023, the Australian Financial Review reported that PEP created a Gateway fund for high–net worth individuals to be able to invest in a suite of private equity funds from sources including PEP, Bain Capital, and Nordic Capital, and Leonard Green & Partners.<ref name=":62">{{Cite web |last=Thompson |first=Sarah |last2=Snood |first2=Kanika |last3=Rapaport |first3=Emma |date=2023-04-18 |title=PEP Gateway fund-of-funds goes in with Bain, Brookfield and Carlyle |url=https://www.afr.com/street-talk/pep-gateway-fund-of-funds-goes-in-with-bain-brookfield-and-carlyle-20230418-p5d1ex |archive-url=https://archive.today/20231002152040/https://www.afr.com/street-talk/pep-gateway-fund-of-funds-goes-in-with-bain-brookfield-and-carlyle-20230418-p5d1ex |archive-date=2023-10-02 |access-date=2024-05-09 |website=Australian Financial Review |language=en}}</ref><ref>{{cite web | last = Weinman | first = Aaron | title = Pacific Equity Partners invites the wealthy into 'privileged' PE club | url = https://www.afr.com/companies/financial-services/pacific-equity-partners-invites-the-wealthy-into-privileged-pe-club-20230526-p5dbje | date = 2023-05-29 | archiveurl = https://archive.today/20230529010023/https://www.afr.com/companies/financial-services/pacific-equity-partners-invites-the-wealthy-into-privileged-pe-club-20230526-p5dbje | archivedate = 2023-05-29 | website=Australian Financial Review}}</ref>

In 2025, the company closed PEP Fund VII for A$3.2 billion.<ref name=":9">{{Cite news |last=Winning |first=David |date=2025-07-10 |title=Pacific Equity Partners’ Johns Lyng Bid Followed Rapid A$3.2 Billion Fund Raise |url=https://www.wsj.com/business/deals/pacific-equity-partners-johns-lyng-bid-followed-rapid-a-3-2-billion-fund-raise-912a40c4 |archive-url=https://archive.today/20251007111635/https://www.wsj.com/business/deals/pacific-equity-partners-johns-lyng-bid-followed-rapid-a-3-2-billion-fund-raise-912a40c4 |archive-date=2025-10-07 |access-date=2025-12-31 |work=[[The Wall Street Journal]]}}</ref> PEP made a bid for Johns Lyng, an insurance repair company, for A$1.1 billion.<ref name=":9" /> As of June 2025, the bid was accepted and pending closing.

== Culture ==

According to the Australian Financial Review, Pacific Equity Partners focuses on "apprenticeship" style modeling, hiring only junior staff and training them over time to build a strong internal culture. The investing decisions and compensation are based on a team level to avoid "hero culture".<ref name=":1" />

PEP screens about 120 buyout candidates per year and typically executes two buyout deals per year. PEP focuses on purchasing companies in mature, stable markets with a potential for growth of at least double earnings, with an exit path after five to seven years.<ref name=":1" /><ref name=":9" />

The company's headquarters are in [[Deutsche Bank Place]], Sydney.<ref>{{Cite web |date=2005-09-01 |title=Eye spy from the glass sky of snappy Deutsche Bank Place |url=https://www.afr.com/property/eye-spy-from-the-glass-sky-of-snappy-deutsche-bank-place-20050901-jk99m |access-date=2024-05-09 |website=Australian Financial Review |language=en}}</ref><ref>{{Cite web |date=2007-04-14 |title=Towers of power |url=https://www.afr.com/politics/towers-of-power-20070414-jk9du |access-date=2024-05-09 |website=Australian Financial Review |language=en}}</ref>

==References== {{reflist}}

==External links== *{{official|https://www.pep.com.au}}

[[Category:Private equity firms of Australia]] [[Category:Financial services companies established in 1998]] [[Category:1998 establishments in Australia]] [[Category:Australian companies established in 1998]]