Kuala Lumpur-headquartered private equity firm Navis Capital Partners has put its education supplies company Modern Star up for sale and is seeking over A$800 million ($542 million) for the Australian business, according to a person familiar with the matter.
The development was first reported by Reuters, citing sources that said Navis Capital and its advisers are seeking indicative bids by October 9 for Modern Star, which sells education equipment such as furniture and toys to early childhood learning centres in Australia, China, and Singapore.
The firm’s Sydney-based partner Philip Latham then confirmed to Reuters that Navis Capital had so far received interest from local and international firms as well as from strategic and educational businesses.
The interested parties include other Australia and offshore private equity firms, especially those with an Asian-growth focus, according to the Reuters report.
Navis Capital acquired Modern Star in 2014 for an undisclosed sum in a deal that valued the business at up to A$250 million ($169 million). The company made several acquisitions since then, including the purchase of China-based educational equipment and furniture provider to the kindergarten sector, Wisdom.
Modern Star is said to have delivered double-digit earnings growth in the last five years, with close to 20 per cent of its earnings before interest, tax, depreciation and amortisation (EBITDA) for the year ending June 2019 came from its China-based operations.
Last November, Navis Capital struck its biggest-ever deal with the acquisition of Australian medical device company Device Technologies from Pemba Capital Partners for over A$700 million.
The firm’s co-founder and managing partner Nicholas Bloy had said beyond Southeast Asia, the other markets in Asia that he “thinks carefully about” are Australia and New Zealand.
“Purely domestic buyouts in Australia is a cramped space and then you have your pan-Asia funds, but there is a niche in Australian mid-market companies where Asia is already very important to them or is the next chapter for them,” he said at DealStreetAsia’s Asia PE-VC Summit 2018.
Navis Capital is currently on the road to raise $1.75 billion for its eighth and largest vehicle, Navis VIII. The vehicle has a hard cap of $1.9 billion and has achieved its first close at $1 billion this April.
The fund will cut cheques between $50 million and $150 million, which is its sweet spot, and is also likely to make smaller investments — in the $25-50 million range — to bridge a funding gap it sees as largely unaddressed by other investors in the region.
Founded in 1998 by former Boston Consulting Group executives Richard Foyston, Bloy and Rodney Muse, Navis focuses on buyouts, recapitalisations and financial restructuring across Asia, especially in Southeast Asia, Australia and Hong Kong.
The firm currently manages about $5 billion in public and private equity capital and has made about 80 control investments in the region.
DealStreetAsia reported that Navis Capital is in talks to exit its existing stake in Singapore-based logistics firm Eng Kong Holdings to an Asia-based private equity fund that focuses on logistics investments for less than $144 million.