American PE player Platinum Equity on Aussie trip with $18b fund

afr.com:

Fresh from winning the auction for Jeld-Wen Australasia, Los Angeles-headquartered private equity firm Platinum Equity is drumming up interest in its $US12 billion ($18 billion) buyout fund from Australia’s wealthy.

Richard Whiteoak of Whiteoak Capital. Cole Bennetts

Street Talk understands the carve-out specialist has hired Sydney’s Whiteoak to round up investors for its Fund VI, which is due to wrap up its fund-raising by mid-December. Sources said Whiteoak had secured a $50 million allocation and had already received commitments for half the amount.

Prospective backers are being told to think of 8 per cent preferred return and a 10-year term. The firm focuses on mid-market assets hamstrung by operational troubles that Jeld-Wen and its team of 300 can whip into shape. It’s a bit like home-grown player Allegro Funds – with whom it competed in Jeld-Wen Australasia’s auction – but much bigger with $US36.4 billion of limited partners commitments.

Its dealmakers are often spotted fishing for deals on the Australian shores. They carved out a 70 per cent stake in Telstra’s directories business Sensis for $454 million in 2014. More recently, they have been stalking Carlyle Group’s Accolade Wines, which is struggling with its debt load.

Last year, Platinum Equity paid 7.8 times earnings on average for platform acquisitions, way lower than the 13.8 times industry median, according to the pitch deck. It has carved assets out of multinational corporations including GE, Philips, Motorola, AT&T and Fujitsu.

Over its six funds, the firm has averaged 24.9 per cent net internal rate of return and realised $US24.4 billion for its backers. That represents a 1.8 times multiple on money invested.

The sell-side pitch said limited partners