Goldman Sachs offloads Hirepool

Goldman Sachs JB Were's private equity arm has ditched plans for a float of Hirepool and sold the hire equipment rental business to an Australian rival in a deal worth around $172 million, says a source familiar with the situation.

Next Capital, a firm set up by three former executives of Macquarie Bank's private equity arm, has agreed to buy Goldman's 51 per cent stake and the 24.5 per cent held by Mainfreight.

But Hirepool managing director Tenby Powell, who held a 24.5 per cent stake with his wife, Sharon Hunter, will remain a shareholder and active in the businesses.

The deal came on the same day as the sale of New Zealand glass products maker Metropolitan Glass & Glazing to Catalyst Investment Managers, another Australian private equity firm, according to a report from Bloomberg. No price was disclosed on this sale.

The deals are the latest in a string of sales to Australia's burgeoning private equity funds, which typically raise money from retail investors and often invest it in controlling stakes in private companies.

The funds generate high returns by matching their equity investments with large borrowings and active management of the businesses in which they invest.

It is not immediately clear why Goldman Sachs opted for a trade sale rather than adding to the trickle of floats onto the NZX. Goldman had earlier indicated it was considering a float as well as a trade sale.

However, the fund is likely to have decided it could have got a faster and cleaner disposal of the business.

At least two large stockmarket investors have said they would have liked to have seen more detail on the business, but they would not say whether Hirepool would have been an attractive buy.

Next Capital confirmed it had agreed to buy the business, subject to overseas investment office approval and documentation.

"We are very excited about the deal and are looking forward to working with Tenby," said Next Capital's Sandy Lockhart.

The sale price is equal to around eight times March 2006 trading profits and was ahead of earlier indications of a sale price of around $150 million. Goldman Sach's own investment bank brokered the sale.

Mainfreight sold because Hirepool was not a core asset.

The company "inherited" the stake through its takeover of rival Owens three years ago.


HIREPOOL

* Equipment rental firm.

* Founded in 1955 as Modern Industrial Methods.

* The first branch was in Penrose.

* Later merged with Labour Pool, a company that hired out workers for labour, and its name changed to Hirepool.

* Now operates branches throughout New Zealand.