CHAMP Private Equity Makes a Six-Fold Return


September 9, 2015

Private equity firm CHAMP Private Equity can pop out the champagne, as the firm just recorded a near six-fold return from its investment. The firm made the profit on the sale of Accolade Wines share in Matthew Clark, UK’s biggest drinks distributor to pubs.


The Deal


Accolade Wines sold its 50% stake in Matthew Clark to Conviviality Retail. The company (WHAT) bought the drinks distributor from Accolade Wines and its other owner, Punch Taverns.


The sale meant that CHAMP Private Equity, which owns around 80% of Accolade Wines, enjoyed a hefty return. According to Sydney Morning Herald, CHAMP Private Equity will make around $140 million profit from the share sale. CHAMP’s chief executive, John Haddock, told Fairfax Media, Matthew Clarke had been performing well. “Effectively, we’ve made six times our money,” Mr Haddock commented on the exit.


The wine business won’t need to worry about selling its own brands to Matthew Clarke, even under the new ownership. It signed a 10-year supply agreement with the new owners. “The business, for us, is an important route to market and there’s no real change in there,” Mr Haddock told Sydney Morning Herald.


The two companies had been in talks over the sale since July.


Stake in Accolade Wines


The private equity firm bought its controlling stake in 2011 from the US-based alcohol beverage company, Constellation Brands. The US giant still has a 20% stake in Accolade Wines. The private equity firm paid $210 million for its 80%-stake. Furthermore, Constellation Brands paid a much heftier price for the wine business in 2003, when it bought it for $1.1 billion. Accolade Wines was then known as BRL Hardy.


Accolade Wines sells branded wines, such as Hardys, Houghton and Banrock Station. It acquired the Grant Burge Wines business earlier this year. Industry experts believe the deal cost around $35 million, but the parties have not provided an official figure.


According to CHAMP Private Equity, the company has been performing well. Mr Haddock was quoted in the Sydney Morning Herald stating, “It’s largely debt-free”.


The private equity firm is actively looking to expand its global wine brands under Accolade Wines. It is reportedly in a finalising stage with a wine brand in Chile.


Lucrative Asian Markets


The wine industry undergoing changes as emerging markets like China are providing huge opportunities for businesses. According to Euromonitor, the Asia-Pacific region will become the world’s most dynamic wine market within the next few years. The regions average value growth stands around 6.1% (in US dollar terms), while the global average is just 2.6%.


Some brands and distributors are already shifting their focus on Asia, away from Europe. Treasury Wine Estates, which received interest from private equity firms last year, has said they will focus on Asia. “Asia is a fantastic opportunity for us. Clearly greater China is a big piece of that opportunity, but so is Korea and so is Japan,” told the company’s chief executive officer, Michael Clark, to the Wall Street Journal.


If you want to find private equity deals in the wine industry, check out the deals at DealMarket.

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