Ironbridge on a 'buy and 'n' build' mission

28-Oct-2011 Ironbridge on a ‘buy ‘n’ build’ mission

28 Oct 2011
Edited by Sarah Thompson, Christine Lacy and Stephen Shore

At the start of 2011, market doomsayers gleefully predicted the demise of Ironbridge Capital with floods causing chaos at its Super A-Mart chain, not to mention a dismal fund-raising environment.

Tapping investors for funds is still no easy task. Nonetheless, Ironbridge is now in a much stronger position to start doing so with plans to raise about $1 billion next year for Fund 3.
Street Talk can reveal Ironbridge this week signed on the dotted line to acquire WA-based Australian Offshore Solutions, which it has packaged in with two other vessels from different vendors.

The overall deal value is less than $100 million, but Ironbridge views the purchase as a “buy ‘n’ build” investment, similar to what it did with the Easternwell drilling services business.
Before being sold to Transfield Services last year for $575 million, the private equity firm poured about $400 million into expanding Easternwell.

The plan with Australian Offshore Solutions, based in Freemantle, is to create a diversified marine services business – in the same ilk as Mermaid Marine – servicing the oil & gas sector in the north-west shelf of WA. Further bolt-on purchases are in the offing.
The readies for this acquisition came from Ironbridge’s Fund 2, which has enough left in it for one more investment in the $200 million to $250 million range.

According to the CalPERS website, Ironbridge’s 2003-04 fund returned a net internal rate of return of 8.2 times. The fund’s 2006 vintage, which is yet to return capital, is tracking closer to an IRR of 2.4 times.

Meanwhile, the sale process of iNova Pharmaceuticals, which Ironbridge jointly owns with Archer Capital, is gathering steam. First-round bids are due before the end of the month (although it should be noted several bidders are on different timetables).
It’s believed there is interest from the likes of Aspen Healthcare while larger private equity firms, such as Carlyle and TPG, are rumoured to be circling.
INova’s earnings before interest, tax, depreciation and amortisation have doubled over the past five years with $70 million to $75 million expected for 2011-12, rising to $80 million-plus the year after.

London-listed GlaxoSmithKline came close to buying iNova last time it was on the block.
Archer and Ironbridge bought iNova in November 2006. It has consumer healthcare and specialty prescription brands in more than 15 countries.