Joint venture buys Emeco

GS Private Equity and Pacific Equity Partners have paid nearly $500 million for earthmoving equipment provider Emeco International.

Hailed by PEP managing director Paul McCullagh as the biggest private equity transaction of last year, the sale was announced on December 20.

He said Emeco represented a combination "made in heaven": a strong management team, double digit growth, the opportunity for international expansion and only a few years off from going to the public market. Every private equity firm in Australia looked at this one,” McCullagh said.

Emeco rents and sells earthmoving equipment such as excavators, dump trucks and bulldozers.

It is based predominantly in Australia, but also has business in Indonesia and the US.

Emeco managing director Laurie Freedman said the sale came after Deutsche Bank conducted a four-month search for buyers.

“It's a strong and exciting new beginning. With (GS and PEP's) financial capability and operational management expertise, coupled with our core skills and market position, it heralds the commencement of a very exciting global step-out for Emeco.”

He said Emeco hoped to further expand in Australia, ramp up its business in the US and branch out into Europe.

"We recently incorporated in the Netherlands, which we will probably use as a corporate base. From that we will launch into Europe generally,” Freedman said. He joined Emeco in 1999 and has since turned the business around.

“I was able to build a team from colleagues I had worked with around the world over the years. We have been delighted with the progress,” he said.

The Emeco sale, the biggest yet for PEP, was achieved by the relationship between PEP and GS Private Equity.

“We have very similar backgrounds of people...we sought each other out,” McCullagh said.

Although the two firms had never formed a joint venture before, they were now working on another transaction together, he said.

Emeco reported a net profit of $23.2 million in the 12 months to June 30, up on the previous year's $17.4 million.

With operations in Australia and Indonesia, Emeco recently set up branches in the US cities of Houston and Atlanta.