Hirequip could be sold to private equity group

File photo / Hawkes Bay Today

Michael Stiassny and Brendon Gibson, the receivers of HireQuip's parent companies, said they had entered into exclusive talks with Next Capital, an Australian private equity firm, to sell the HireQuip business.

The negotiations are through the Next Capital subsidiary, New Zealand Rental Group Ltd (NZRG), which owns Hirepool - HireQuip's main competitor.

"The exclusive arrangement is the result of the recent sales campaign and we now move to see if an agreement can be concluded," Brendon Gibson, from insolvency specialists KordaMentha, said in a statement.

A key term is that all HireQuip employees will be offered a position in the merged entity, he said.

The HireQuip subsidiaries will continue to operate as business as usual under the direction of the HireQuip chief executive Brian Stephen, Gibson said.

The final agreement however will be subject to regulatory approvals including from the New Zealand Commerce Commission.

In July, Westpac called in receivers for HireQuip's parent shareholding companies Pacific Equipment Solutions, PES Finance and Hire Equipment Group. They are ultimately owned by Tasman Capital Partners (NZ), which lists private equity specialist Rob Nichols among its three Australian owners.

If successful, Hirepool and HireQuip combined would become the biggest player in the $100 million-a-year equipment hire market in New Zealand.

The three main equipment hire companies have about three-quarters of the local market.

Porter Group, which specialises in heavy equipment hire, has about 29 per cent, HirePool has about 24 to 25 per cent, and HireQuip around 21 per cent.

Next Capital, a mid-tier private equity company with two funds worth a total of A$600 million under management, owns Onsite, the second biggest hire equipment company in Australia.

The Next Capital transaction is estimated to be worth just under $100m, according to one market source.

Hirepool is majority-owned by Next Capital and Hunter Powell Investments, which is jointly owned by former Hirepool chief executive Tenby Powell and his wife Sharon Hunter.

Hunter was one of the principal partners in PC Direct, at one time one of New Zealand's leading computer companies.

HireQuip has been sold several times in the past six years - PES Finance paid $165m for it in 2006, and it did a stint as an NZX listed stock in 2005-6.

HireQuip has a strong South Island presence - particularly in Christchurch.

Next Capital, which was formed in 2004 by former Macquarie Bank employees, bought into Hirepool in 2006. Its other investments include an 88.2 per cent stake in Healtheries, one of Australasia's leading health food companies. In February 2007, Next Capital invested A$17m to buy Nutra-Life Health & Fitness, a New Zealand health supplements and sports nutrition company.

In May this year, Next Capital bought an 86.8 per cent stake in GoBus, a Hamilton-based bus company, for $84.6m.