Capital Group

History

In mid 2001, CapitalGroup was approached by the management of Moore Gallagher Limited (“Moore Gallagher”) to assist them in the leveraged buyout of 100% of the company’s capital. At the time Moore Gallagher was owned by a consortium of private equity companies including 3i, AMP, and Direct Capital. Management wanted a larger stake in the company and to deal with one local partner who would support them in their vision for the development and growth of the company. As well as a party that could add value at a strategic level, they needed a financial partner who would structure the transaction in what was a highly leveraged model to minimise risk and provide capital for development.

Moore Gallagher is a customer communications company. It is one of New Zealand’s largest providers of print, database management and mail house services. Moore Gallagher has national sales, distribution and manufacturing coverage and services key industry sectors in all parts of the country. It employs 400 people and has a turnover in excess of $50 million.

Why did CapitalGroup invest?
Financing Structure
Outcome

Why did CapitalGroup invest?

Management – Management are experienced leaders in the industry.
Size – Moore Gallagher is a significant business and one of the largest participants in its market sector. This improves exit strategies and makes the business scalable from a growth perspective.
Industry – Outsourcing continues to be a growth industry. More specifically the outsourcing of billing services continues to become a strong business initiative for large corporates and utilities. Key customers for Moore Gallagher include TelstraClear, Fly Buys, and Genesis Energy. If you receive a bill or statement from these organisations it has come from Moore Gallagher.

Financing Structure

The buyout was completed in late 2001 and involved a highly leveraged structured financing package. CapitalGroup provided the equity tranche. CapitalGroup also structured an incentive package for management which allowed them a high level of ownership and participation in the success of the company.

The overall risk was managed by securing a non recourse senior banking facility from a leading banking group.

In 2006, CapitalGroup and management successfully divested the 4 ½ year investment in Moore Gallagher to a consortium consisting of Wickliffe Press and NZ Post.

Outcome

After over 4 years of ownership by CapitalGroup and management, Moore Gallagher was acquired by a consortium consisting of NZ post and Wickliffe Press (April 2006). This was a significant transaction which generated an excellent return for both CapitalGroup and the management shareholders.