Waterman Fund 3
Waterman Fund 3 is a NZ$200 million mid market buyout fund, managed by Auckland, New Zealand headquartered Waterman Capital (www.waterman.co.nz)
Established in 2004, Waterman Capital is one of New Zealand’s most experienced private equity players, managing a series of funds that channel capital and skills to private New Zealand companies like Manuka Health, Academic Colleges Group, and Healthcare Holdings (Mercy Ascot) an operator of the largest private hospitals in Auckland.
In 2015 Waterman Capital won the New Zealand Private Equity and Venture Capital Association (NZVCA) deal of the year award for its Fund 2 investment in Manuka Health. Through the period of Waterman Fund 2’s ownership revenue at Manuka grew from $17m in 2012 to approximately $70m in 2015, with its sale late in 2015, delivering Waterman Fund 2’s investors a strong top quartile return.
Waterman has a long track record of investing in, and adding value to businesses in the mid-market space. Waterman Fund 3 will continue to provide capital and skills to assist private, New Zealand based businesses achieve their growth aspirations. These companies form the heart of the New Zealand economy and have significant growth potential but are often constrained by a lack of capital and resources.
Waterman Fund 3 will focus on expansion and replacement capital, and management buy-out transactions. In all instances Waterman seeks to partner with management and other shareholders for mutual benefit.
Waterman’s investment thesis is to ‘create superior returns through active involvement in privately owned New Zealand companies, and the investment focus for Waterman Fund 3 is consistent with prior funds.
Waterman Fund 3 have completed four investments to date, My Food Bag and PBT Group Ltd, Provincial Education Group and TRG Imaging.
My Food Bag. On 22 November 2016, Waterman 3 acquired a majority shareholding in market leading home food delivery provider, My Food Bag.
My Food Bag is the clear market leader in this niche area of the grocery industry and was the first meal-kit business to launch in New Zealand. The company was established in 2012 by Celcilia Robinson, Theresa Gattung and MasterChef winner Nadia Lim and has since grown to become a household name in New Zealand.
The product and service offering includes delivery of meal ingredients and recipes aimed at resolving the daily dilemma of “what are we having for dinner tonight?” My Food Bag’s success is attributed to an environment where people are increasingly time-poor and health conscious. The company currently delivers more than one million meals to New Zealander’s each month across a customer base of over 50,000 households.
My Food Bag also won the rising star award in 2014 at the Deloitte Fast 50, which recognises New Zealand’s fastest-growing companies under 3 years old.
On 5 March 2021, Waterman Capital Fund 3 completed the partial exit of My Food Bag via an IPO and dual listing on the NZX & ASX, raising ~$340 million at $1.85 per share. This listing represented the largest IPO in New Zealand since 2014 and ranked My Food Bag as the 49th largest company by free-float market capitalisation on the NZX.
This residual ownership was sold in February 2023 via an off-market transaction, resulting in the complete exit of My Food Bag for Waterman Capital Fund 3 and its investors, including VPEG2A and VPEG2B. Proceeds from the realisation were distributed back to VPEG2 in March 2023.
PBT Group Ltd. In October 2017, Waterman Capital acquired a majority stake in PBT Group alongside founder Peter Baker. PBT, founded in 1972, is a national transport, courier and logistics operator across New Zealand providing services including the transport of palletised freight, courier service for smaller packages, container pick-up and delivery and third-party logistics.
The business has a nationwide depot network of 20 branches and a workforce of 800 people, including 400 owner drivers. PBT moves more than 13 million individual freight items each year.
This sector within New Zealand has a robust outlook with freight task expected to grow by 48% in tonne-kilometres by 2048. PBT is well placed to build upon it comprehensive national network and integrated service offering as it begins a new chapter in its long and successful history.
On 1st November 2023, VPEG2 investee Waterman Fund 3, announced that they had signed an agreement for the sale of the courier business of portfolio company PBT Group to NZ Post. The agreement is conditional upon Commerce Commission approval, with clearance (subject to the acquisition not substantially lessening competition in the market) anticipated to be received during April 2024.
During September 2017, Waterman Fund 3 acquired 75% of PBT Group, a provider of freight, courier and logistics services throughout New Zealand. Since Waterman’s investment PBT has grown significantly to now provide transport of palletised freight, courier services for smaller packages, container pick-up and delivery and third-party logistics including storage, pick/pack and transport/delivery, all serviced by an extensive national network of 19 branches and a workforce of approximately 800 staff, including around 400 owner drivers.
Upon the successful completion of the sale, the process of transferring PBT’s customers to NZ Post is expected to take at least 12 months. Throughout that transitional period the PBT team will be supporting customers to ensure a smooth handover and aligning the remaining logistics service lines of Transportation, Air and Ocean to reflect a more focussed offering.
Provincial Education Group. On 31 July 2017, Waterman 3 acquired a majority shareholding in early childhood education provider, Provincial Education Group Limited (‘Provincial’).
Provincial was founded in 2013 by Katie and Andrew Phillipps who alongside experienced Australian childcare operator Chris Giufre have grown the business from a single childcare centre to a group of 21 centers predominantly in provincial New Zealand towns.
Waterman 3’s investment assisted with the funding of a further 19 centres bringing the group to a total of 40 centres. As a result, Provincial will be the fourth (close to third) largest operator of childcare centres in New Zealand with a total of 2,733 license places and over 300 teachers. The core values of Provincial are to put parents and children first. It aims to promote passion, professionalism, and family values across all of Provincial’s centres to bring out the best in children and develop their capabilities in readiness for primary school.
Early childhood education is a regulated sector in New Zealand and is dependent on government funding as its primary source of revenue. There continues to be support from all political parties for early childhood education as evidence of its long – term benefits, gain widespread acceptance. Increasing levels of regulation and compliance tend to favour larger, better organised organisations like Provincial that have the systems and processes in place to respond accordingly.
There are approximately 2,500 childcare centres in New Zealand and the large majority of these are independently owned and operated. Waterman has invested to support three highly capable industry experts in expanding Provincial’s national footprint as it continues to acquire and improve further childcare centres.
TRG Imaging. In December 2018, Waterman Capital Fund 3 completed their fourth Private Equity investment into TRG Imaging, New Zealand’s largest provider of radiology services. Established in 2004, TRG Imaging is a leading provider of diagnostic imaging services, comprising of 19 clinics across the North Island and the Auckland Breast Centre, New Zealand’s leading provider of breast cancer related services. It is the second largest diagnostic imaging provider in New Zealand and is the largest in the North Island.
TRG plays a critical role in New Zealand’s health infrastructure with diagnostic imaging increasingly being used as a preventative tool in the early identification and treatment of health issues. The health sector benefits from a strong outlook as population growth, particularly in Auckland, an ageing population and demand for increasingly sophisticated diagnostic solutions drive annual increases in the provision of patient services.
During March 2020, Waterman Capital Fund 3 completed the strategic bolt-on acquisition of New Zealand’s largest private provider of medical oncology services, Canopy Cancer Care (Canopy).
With 19 oncologists and 1 haematologist, Canopy is the largest provider of private cancer medical oncology treatments in New Zealand.
Canopy’s first clinic was established in Epsom in 2012, and since then it has expanded its operations to four clinics: two clinics in Auckland (Epsom and the North Shore), a clinic in Whangarei and a clinic in Tauranga (which is currently operated a 50/50 joint venture with local oncologists). Canopy’s clinicians, nurses and support staff specialise in the care of adult patients requiring medical cancer treatment including chemotherapy, immunotherapy, antibody therapy, hormone therapy and more targeted therapies.
Return to Private Equity Portfolio
