Tyco sells transtasman assets to NZ firm for $113 million

By PAUL PANCKHURST


A New Zealand private equity fund has swooped to buy $113 million of the transtasman businesses of global conglomerate Tyco International.

The deal - tipped in the Business Herald on Tuesday - was announced yesterday by investment bank Goldman Sachs JBWere.

The purchase includes New Zealand operations - air-conditioning firm Climatech among them - but is mostly Australian.

That reverses the usual trend of Australian private equity firms picking off New Zealand assets - as with this year's purchases of Whitcoulls, Bond & Bond and Noel Leeming.

"For the first time, you've seen a New Zealand private equity fund buy predominantly Australian businesses - and that's a whole new dawn," said Clark Perkins of Goldman Sachs.

Private equity investors typically buy assets with the aim of improving operations over three to five years and then exiting via sharemarket floats.

The buyer is Hauraki Private Equity No 2, a fund created by Goldman Sachs that this year raised $75 million from local investors.

It is installing a former managing director of Tyco Services in Australia and New Zealand, Glenn Wallace, as managing director of what will be renamed Norfolk Group Holdings.

Wallace is the managing director of Tiri Group, a New Zealand business owned by the first Hauraki fund.

The vendor, Tyco International, the world's biggest maker of security systems, says it wants to focus on its fire and security businesses in Australia and New Zealand - ADT, Armourguard and Wormald.

That is part of a global refocusing for a company tainted when former chief executive Dennis Kozlowski was charged with looting the firm.

The Australian assets in the deal include O'Donnell Griffin - described as one of Australia's oldest and largest electrical installation and service companies - and account for 80 per cent of an annual turnover of more than $750 million.

Wallace said the business would have 2850 staff in Australia and 650 in New Zealand.

The purchase is mainly debt funded, with Westpac and ANZ providing senior debt and a $10 million issue of subordinated debt planned within months.

Back-of-an-envelope calculations - based on "calls" for Hauraki No 2 investors to stump up cash as pledged - suggest the equity part of the deal is about $22 million.

Goldman Sachs said the businesses in the deal spanned electrical and mechanical contracting, building products and facilities management.

New Zealand businesses included Tempest (air-conditioning), Electrical (electrical services), Metalbilt (roller doors), Danks Bros (roller doors) and NZ Fire Doors (fire doors).