Dan Radcliffe and Castlerock pick up HQ Travel stake as Mercury Capital exits

When Dan Radcliffe founded International Volunteer HQ in 2007, he did so with a loan against the family farm.

Local private equity firm Castlerock has taken a majority stake in New Plymouth-based HQ Travel Group, which offers volunteer work and internships to young travellers.

Founder Dan Radcliffe has retained a significant shareholding having earlier sold down in 2018.

Australasian investment firm Mercury Capital has exited, selling its 71 per cent stake for an undisclosed sum.

Mercury – headed by New Zealander Clark Perkins – bought its controlling stake in HQ Travel six years ago and last year hired Cameron Partners to run a sale. While the cost of those shares wasn’t made public, Mercury is known to only invest in businesses with enterprise values above $50 million.

Radcliffe, who was named New Zealand Young Entrepreneur of the Year in 2013, set up the business known as International Volunteer HQ from his family’s Taranaki farm in 2007.

When Mercury took up a majority stake, his shareholding – held in a family trust - was reduced to 22.51 per cent.

It is not clear what his new direct shareholding is because the new ownership structure involves a limited partnership, where ownership percentages are not public.

The Radcliffe family trust does hold 46.5 per cent of the shares in the general partner of the LP, however, with Castlerock owning 53.5 per cent, according to Companies Office filings updated last week.

Castlerock is managed by the Bancorp Group, an Auckland investment bank, and is designed for wholesale, charity, and not-for-profit investors.

“We select and partner with businesses that have already grown to the point where they can sustainably make distributions of profit to shareholders,” its website says.

Castlerock principles Andrew Paterson and Matt Willacy have joined Radcliffe as HQ Travel directors.

Last year the Australian Financial Review reported from sale documents that the business was being pitched as the world’s largest portfolio of volunteer and internship travel programmes with a scalable global reach.

It said the business has two main units - International Volunteer HQ (IVHQ) and Abroad HQ, which was launched in 2017. Financial information in the sale document estimated earnings before interest, tax, depreciation and amortisation (ebitda) were on track to double from about $4m in the 2023 financial year to $8m by June 2025.

Asked to comment on the transaction, Willacy said he was excited about the business and its future. The terms of the deal were confidential.

He provided the Herald with a statement, which outlined HQ Travel’s activities and described the business as “one of the world’s leading providers of impact, adventure, and educational travel, facilitating impactful travel experiences in over 60 countries for customers living in more than 100 countries”.

“Since 2007, IVHQ alone has helped over 137,000 individuals of all ages to make a difference abroad.”

The company has a strong environmental, social, and governance focus and has been a certified B Corporation since 2015 while its business operations in New Zealand have been certified carbon neutral since 2016.

Radcliffe said in the statement: “I’m really excited to be reinvesting alongside Castlerock and to get more involved in the operations of the company again. We’ve had a few tough years coming through Covid, but the business is well set up and there’s a huge amount of opportunity in front of us.”

Simon Birkenhead, chief executive and investment partner said: “I’m incredibly proud that both IVHQ and Intern Abroad HQ were named 2023′s top rated providers in their fields by GoAbroad and GoOverseas. Our teams around the world are all excited by Castlerock’s long term investment outlook and how this will be able to support HQ Travel Group’s continued growth, success, and global impact.”

Duncan Bridgeman is managing editor of NZME Business, which includes the Business Herald and BusinessDesk.