Hong Kong’s PAG, a prominent player in Asian private equity, reached an agreement last month to purchase the controlling stake of Australian Venue Co (AVC) from global buyout titan KKR. The deal marks PAG’s strategic move into Australia’s hospitality industry, underlining its commitment to expanding its regional footprint. The transaction’s financial details remain undisclosed.
AVC, known for curating an impressive portfolio comprising over 210 pubs, bars, and event spaces across Australia and New Zealand, is set to change hands.
Subsequent acquisitions have further enriched this portfolio, solidifying AVC’s stature in the hospitality domain.
Led by co-founder and chairman Weijian Shan, PAG’s acquisition of AVC aligns with the firm’s commitment to nurturing robust businesses and propelling them to heights on Australian soil.
The road to this acquisition was paved with notable developments. KKR’s endeavours to enhance the AVC portfolio, including the substantial A$200 million (now $128.5 million) investment of 87 Coles pubs in 2019, underscored its commitment to expansion. The subsequent plan to list AVC on the Australian Securities Exchange in early 2021 faced a setback due to pandemic-related uncertainties, culminating in the A$352 million IPO cancellation.
Earlier this year, speculation arose regarding KKR’s negotiations to sell AVC to Melbourne-based private equity firm BGH Capital, which ultimately unravelled due to pricing differences. Reports suggest that KKR’s investment in AVC totalled approximately A$500 million, with an initial commitment of A$150 million. The company was reportedly seeking A$1 billion for the Australian hospitality gem.
The impending transaction with PAG is anticipated to conclude in late 2023, with KKR’s capital markets arm facilitating acquisition financing.
PAG’s Australian Ventures
PAG’s strategic investments in Australia extend beyond the realm of hospitality. The firm acquired Craveable Brands, a prominent restaurant operator, for an estimated A$500 million in 2019. Last year, PAG solidified its presence with the A$550 million acquisition and integration of Patties Foods and Vesco Foods.
PAG’s recent acquisition of Sydney’s 44 Market Street at a discounted rate of A$393.1 million in the real estate sector stands out. This move exemplifies PAG’s knack for seizing market opportunities as the Australian market experienced a downturn. The acquisition, conducted through PAG Real Estate Partners Fund III, marked a significant milestone, with the fund achieving a final closing at $1.8 billion this year, making it the most substantial fundraising effort for a core-plus/value-added strategy in 2023.
PAG’s acquisition of Sydney-based office fit-out specialist Unispace in 2020 for a sum reportedly exceeding A$300 million highlights the firm’s multifaceted approach to investing in the Australian market.
In the dynamic landscape of Australian business, PAG’s strategic move to acquire AVC signifies the convergence of regional growth aspirations with the allure of Australia’s flourishing hospitality scene. With PAG’s expansive vision and AVC’s established presence, the partnership is poised to redefine Australia’s hospitality industry dynamics.
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