PAG Asia Capital in advanced talks to acquire KKR-backed AVC

afr.com:

Private equity behemoth PAG Asia Capital is making another major foray into Australia’s consumer sector, in what’s expected to be its biggest swing so far in the region.

Street Talk can reveal PAG is in discussions to acquire KKR-owned Australian Venue Co, and has secured a period of exclusive due diligence to firm up a binding offer. Jefferies and Allens are advising AVC while Bank of America and Ashurst are in PAG’s tent.

Australian Venue Co CEO Paul Waterson. 

AVC is slated to make $195 million in cash earnings before interest, tax, depreciation and amortisation this year. That’s well above the $112 million forecast in the 2021 pathfinder prospectus. Lender sources told this column on Sunday the business could fetch a price of as much as $1.4 billion, given strong like-for-like sales growth despite the consumer slowdown.

PAG – which has Melbourne dealmaker Sid Khotkar on the ground – has been increasingly active in Australia in the food category, last year acquiring the Patties Foods business, which makes Australia’s biggest selling meat pie brand, Four’N’Twenty. Patties Foods also owns the Herbert Adams and Nanna’s pie brands.

Its private equity division is run in the Asia Pacific region by Hong Kong-based Lincoln Pan and most recently acquired cult Sydney chicken shop chain, Chargrill Charlie’s, via its Craveable Brands portfolio company.

As revealed byThe Australian Financial Review in May, that deal saw Chargrill Charlie’s co-founders ink the deal on the basis the chain would one day would one day be a national player, with the deeper pockets of its new private equity owner better able to drive growth beyond its Sydney roots.

Chargrill Charlie’s now sits alongside the bigger fast food brands of Red Rooster, Oporto