Private equity backed Culligan International Group has agreed to buy Australian taps and water systems company Zip Industries for about $550 million. 

As first reported by Street Talk, Culligan and Zip's owners, including Quadrant Private Equity and company founder Michael Crouch, signed a deal the deal on Friday. The company is expected to make an announcement on Monday. 

Culligan was advised by Allens, while Gilbert + Tobin and PwC advised Zip. 

Culligan is a US-based company specialising in residential, office, commercial and industrial water system. 

The company is owned by global private equity firm Advent International.

Advent bought Culligan, which was known for its advertisements starting in the 1950s that featured a cartoon housewife beckoning "Hey Culligan man!", for about $US1 billion late last year. 

It is understood Culligan agreed to buy both Quadrant and Crouch's stakes, and will own the lion's share of Zip, alongside management. 

Culligan is expected to seek to take Zip and its products into North America, China and Europe. 

It comes only two months after Zip abandoned plans to list on the Australian Securities Exchange, as this column also revealed, after a lukewarm response from listed equities investors. 

As part of the marketing, Zip's brokers told fund managers the company would grow revenue 8 per cent in the 2018 financial year to $195 million, while EBITA  was likely to be $39.2 million. 

The John Doumani-led company manufactures the high-tech tap systems at a plant at Condell Park in Sydney's west. The tap systems are now in about 70 per cent of workplaces, and HydroTaps, the sleekly designed accessories, in 20,000 kitchens across the country.

Sydney-based private equity firm Quadrant took a majority stake in the company in December 2013, investing alongside founder Crouch and management in a deal valuing the company at about $300 million. 

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Merrill Lynch's former head of investment banking Geoff Brunsdon is overseeing petrol station property owner Convenience Retail REIT's slated $236.8 million listing, in his role as chairman of APN Funds Management.

In an offer document sent to the corporate regulator, Brunsdon told potential investors that Convenience Retail REIT would come to market with 66 properties leased to petrol station operators Puma Energy Australia, Woolworths, 7-Eleven and Viva Energy Australia, which were independently valued at $308 million. 

The deal was pitched at a 6.5 per cent distribution yield based on 2018 financial year forecasts, growing to 6.79 per cent in fiscal 2019. 

Brunsdon made the pitch as chairman of APN Funds Management, which will manage the new property fund. Other directors include former National Australia Bank executive Michael Johnstone, former Greenhill Australia chief operating officer Jennifer Horrigan and APN Funds Management veteran Howard Brenchley. 

The document outlined an up to $162.2 million raising at $3 a security, which would put a $236.8 million market capitalisation on the company. 

If successful, the fund would hit the ASX boards on July 27 as Street Talk reported earlier this week. 

Bank of America Merrill Lynch and UBS are running the deal as joint lead managers and bookrunners, while Evans and Partners is a joint lead manager and Petra Capital and Morgans are on board as co-leads. 

Co-managers include Crestone Wealth Management and National Australia Bank. 

Gilbert + Tobin is doing the legal work, while Grant Samuel was named as debt adviser. 

It comes about three months after APN Property Group management fronted potential investors to explain the new fund. 

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UBS analysts are in the market with some potentially bad news for BT Investment Management investors. 

The broker reckons BT Investment Management's performance fees could be less than one-third of what most expect over the next few financial years.  

The thesis is built around recent underperformance in some of BT Investment Management's funds, particularly in the JO Hambro Capital offshore equities stable, where UBS says performance has flown under the radar. 

"Over the last five years, performance fees have contributed 16% of BTT's revenue and 20% to group PBT," the analysts told clients on Friday morning.

"However, with only 25% of BTT's performance fee AUM currently above high water marks and 37% more than 5% below, consensus performance fee expectations appear out of reach."

UBS reckons BT Investment Management could record $23 million in performance fees for each of the 2018 and 2019 financial years, while consensus is at around $75 million a year. 

The broker downgraded the stock to "sell" and cut its price target to $11.15, from $12. 

BT Investment Management shares were off 4.7 per cent to $11.74 in early Friday trade. 

Interestingly, the call comes only one month after Westpac Banking Corp sold a 19.2 per cent stake in the investment manager via Macquarie's equities desk. 

Westpac offloaded the 60 million shares for $10.75 each. 

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Private equity giant KKR & Co has agreed to buy a controlling stake in Australian pub roll-up Dixon Hospitality Group, sources told Street Talk on Friday morning. 

It's understood the deal values Dixon Hospitality Group at $190 million, and is scheduled to be signed on Friday. 

KKR is advised by Citi, while Allens advised Dixon Hospitality Group. Street Talk revealed KKR's interest earlier this month. 

It's understood KKR and Dixon management plan to triple the size of the business over the next three years, before considering a listing on the Australian Securities Exchange.

Dixon Hospitality Group boss Bruce Dixon oversaw a run at the ASX-boards earlier this year, before pulling the deal and focusing on talks with private equity players. Sydney-based CHAMP Private Equity had earlier been in talks with Dixon Hospitality Group's owners. 

Dixon Hospitality Group is a pub roll-up, growing to about 50 pubs in its portfolio since inception in 2014, and owns the pub operations rather than property. 

The bulk of the pubs came from Lion Nathan's Open Door in late 2015 and the defunct Keystone in late 2016, and the pitch is all about corporatisation of the local pub sector. 

It's understood Friday's deal values Dixon Hospitality Group in line with what its shareholders were seeking as part of the slated IPO earlier this year. 

It's the second big pubs deal to be signed this week. Moelis Australia paid $677 million for Redcape Hotel Group and its 25 pubs in NSW and Queensland, and said it had planned to float the pub fund in 12 to 18-months. 

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NSW-based Ceres Agricultural Company has quietly kicked off a sale process which has piqued the interest of offshore and domestic suitors. 

Street Talk understands cattle station operator North Australian Pastoral Company (NAPCo), which is majority owned by QIC, and a separate group which includes the Ontario Teachers' Pension Plan, are among a handful of would-be bidders for Ceres.

Colliers International has already overseen site visits in recent weeks and expressions of interest are said to be due in early-to-mid July.  

Ceres operates 15 properties throughout the central tablelands and north-west slopes of NSW, according to its website.

Among those are 'Mayfield' and 'Ballyroe' at Oberon; 'Gunyerwarildi', 'Postmans', 'Brentwood', 'Lava Downs' and 'Inverness' at Warialda.

It may fetch a price tag of $200 million to $250 million and the auction is expected to wrap up in three to four months. 

The business has diverse operations which span 30,000 hectares of Australian grazing and cropping land.

Its website says Ceres operates in logistics, feed mill, is the largest supplier of "supplementary grain fed premium" beef, a major producer of grains, pulses, oilseeds and superfine merino wool.

Ceres is majority owned by former stockbroker turned property entrepreneur Garrick Hawkins, who last year settled a dispute with the Australian Tax Office. 

The potential Ceres sale also comes as private equity behemoth Terra Firma weighs a sale of cattle group Consolidated Pastoral Company. 

It's an interesting time to be selling as industry conditions have improved in the past 12 months, including a rise in asset values and shortage in beef stocks.

Foreign buyers of either asset would need to apply to the Foreign Investment Review Board for approval. 

Elsewhere, APP Securities is re-stocking its ranks and is said to have made six hires.  

In corporate finance, APP has hired former Cabral Resources managing director and JPMorgan banker Michael Bogue and Sydney Capital Partners' Stuart Anderson. 

In institutional sales, Colin Silver, who has had stints at ABN Amro and Deutsche Bank, and former Systematix and JPMorgan operative Jitendra Marchino have joined. APP has also started an Asia desk with two new hires. 

Also in people moves, and as first reported by Street Talk,  CLSA gaming analyst Sacha Krien has resigned from the firm to take up a post at Tabcorp. 

Melbourne-based Krien is said to be joining Tabcorp in an investor relations and corporate strategy role. CLSA plans to replace him. 

 

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