Street Talk can reveal Alceon is seeking to buy in at a $175 million valuation, representing a 5.3 times multiple of EBITDA forecast for the 12 months to June 30. The mid-market PE investor will become a co-investor alongside Boss’ founders Andrew English, Michael Grills and Dan Ryan. The sellers were advised by Miles Advisory.

Boss’ core business is building robotic seeding and planting equipment for agricultural customers on the east coast – think planters, seeders, air carts and cultivators. Its Inverell facility also manufactures spare parts and consumables, and ute trays and trailers. All up, that totalled$70 million revenue in the 2023 financial year, while the business has averaged30 per cent EBITDA margin for the past three years. Market share stands at 29per cent in NSW and 15 per cent in Queensland.

The deal is structured as preference shares, with downside protection and board control for Alceon, as well as incentives for Boss’ management to beat target forecasts.

An information memorandum, dubbed Project Manhattan, sent to potential co-investors, and seen by Street Talk, shows Alceon has high hopes of its latest investment.

Boss’ gross income should cross $142 million by the 2028financial year, which would translate to about $53 million EBITDA, the document said. Future growth is expected to be underwritten by expansion into Victoria, South Australia and Western Australia – outside its usual stomping grounds of NSW and Queensland.

The management team is also eyeing export markets, new products and new sales channels beyond its tried-and-tested method of selling direct lyout of its Inverell facility and Wagga Wagga depot.

Sources said Alceon had no troubles securing backers for the deal and was due to close the transaction in the coming days. Former CHAMP Private Equity deal maker Ben Sebel, currently an adviser to Alceon, will chair the board. Co-head Zac Midalia, who formerly worked at Ruffy Geminder’s Kin Group, will have a board seat.

Alceon was founded by Trevor Loewensohn, Morris Symonds and Phil Green in 2010. The private equity unit has been headed by Midalia and David Wilshire since 2021.

The duo last October delivered a net 80 per cent internal rate of return for its backers in Nido Education. The child care roll-up raised $99 million for its IPO bookbuild, in what ended up as 2023’ssecond-biggest float.

Other investments include ophthalmology and short-stay hospital roll-up SMS Healthcare, IT managed services business EFEX and construction, compaction and traffic management equipment provider Orange Hire.

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Originally published at https://www.afr.com/street-talk/alceon-pe-ready-to-harvest-50pc-of-agricultural-equipment-biz-20240312-p5fbru

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