Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Carlyle splashes A$1 billion on Australian winemaker with eye on China

Published 05/04/2018, 04:46
Updated 05/04/2018, 04:50
© Reuters. FILE PHOTO: A general view of the lobby outside of the Carlyle Group offices in Washington
STZ
-
CG
-
TWE
-
KKR
-

By Byron Kaye and Tom Westbrook

SYDNEY (Reuters) - Buyout giant Carlyle Group LP (O:CG) will buy Australia's Accolade Wines from a local private equity firm for A$1 billion (£546.8 million), triple what the Australians paid seven years ago and underscoring the investment appeal of China's wine market.

The sale of Accolade, Australia's No. 2 wine producer and owner of the Hardys and Banrock Station labels, by CHAMP Private Equity comes as Australian wine exports struggle to keep up with growing demand from China's middle-class.

The Australian export bonanza has been spurred on by a free-trade agreement between the countries since 2015 which has seen China cut import tariffs on Australian wine from as high as 20 percent to about 3 percent.

"This is a company with great brands and strong market positions, with multiple growth opportunities, particularly in Asian markets," Carlyle said in a statement which did not mention China specifically.

Australian wine sales to mainland China jumped 63 percent to a record A$848 million ($651 million) in 2017, putting Australia behind only France, official figures show. Australia's winemakers expect to benefit further from China's plan to raise tariffs on U.S. wine imports.

Accolade does not break out its China export figures but CHAMP Chief Executive Officer John Haddock told Reuters the company expected to grow China exports 80 percent in 2018, from a small base. Total exports were about A$350 million.

"That's a growth that will be around for many years to come," Haddock said in a telephone interview.

CHAMP planned an initial public offering of Accolade 18 months earlier but cancelled it when Britain's vote to leave the European Union prompted it to phase out some low-margin British sales and focus on growth in Asia.

Two of Carlyle's main competitors, TPG Capital Management LP and KKR & Co LP (N:KKR), made rival bids for larger Treasury Wine Estates Ltd (AX:TWE) for about A$3.4 billion in 2014. Treasury rejected the offers and now has a market capitalisation of A$12.4 billion based on Thursday's share price.

A surge in Chinese exports helped Treasury post record half-year profit in March, only five years after it was forced to pour out thousands of litres of unwanted wine out in an unceremonious exit from the U.S. market.

Treasury shares were up as much as 3 percent on Thursday, while the broader market was up 0.6 percent.

© Reuters. FILE PHOTO: A general view of the lobby outside of the Carlyle Group offices in Washington

Carlyle's purchase includes a 20 percent stake held by Accolade's previous owner, Constellation Brands Inc (N:STZ).

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.