Buyout fund closes at $3.6bn

BGH Capital has announced the final close of its second buyout fund at its hard cap of $3.6 billion.

BGH Capital Fund II is the second largest fund raised in Australia after Pacific Equity Partners PEP IV in 2008 which comprised $2.7 billion in core investment capital plus $1.3 billion in co-investment commitments.

Institutional investors that have committed to BGH II include public and private pension funds, sovereign wealth funds, insurance companies, endowments, foundations and family offices from around the world.

BGH Capital Fund I reached final close in June 2018 at around $2.6 billion.
Fundraising for the new fund was formally launched in late 2021 with a target of $3 billion.

Announcing the final close on 1 March, BGH said the new fund would follow the strategy of the first fund seeking to invest in a diverse range of investments across Australia and New Zealand. It will seek to invest in companies where there is significant opportunity to support growth or bring about operational improvement. Targets will primarily be mid-market businesses although it will maintain flexibility to execute large buyouts or smaller growth deals.

Eight investments have been made from BGH I, in education services business Navitas, cyber-security agglomeration CyberCX, ForHealth, Abano Healthcare, TripADeal, entertainment venues and cinemas company Village Roadshow, Laurent bakery and chicken meat producer Hazeldenes.

BGH said these businesses were all performing well and were positioned to benefit strongly as the Australian and New Zealand economies recover from the impacts of COVID-19.

Melbourne-based BGH was founded in 2017 by Ben Gray, Simon Harle and Robin Bishop who own the management firm. Gray previously established and led the Australian and New Zealand private equity team of TPG Capital, of which Simon Harle was a member. Robin Bishop was previously head of Macquarie Capital for Australia and New Zealand.

BGH has built up a team of about 35 professionals including a dedicated operations group, members of which focus on improving performance of portfolio companies.

The founding partners said they expected the new fund to build on the momentum of the first fund.

“We believe that Australia and New Zealand is a highly attractive environment for private equity investment having delivered consistently superior returns relative to other developed markets,” they said. “The scale of BGH Capital’s investment team, our deep connections and our strong operational capabilities remain a key point of differentiation and competitive advantage.”

Image: BGH Capital founding partner Ben Gray.