According to the Financial Review's Street Talk column, mid-market private equity firm The Growth Fund has struck a deal with the Royan Group, which started life in an old wood and coal yard in Parramatta in 1944.
Street Talk understands The Growth Fund, advised by law firm Herbert Smith Freehills, has agreed terms to take a controlling stake in the family-owned and operated company and is working to finalise the transaction.
Royan is a 75 year-old, third generation business with eight sites on the east coast and strong relationships with national insurers and clients. Street Talk speculates that it looks like a fairly typical platform-style deal from the private equity group.
The article says that It would make sense to inject capital to try to grow the business beyond its three-state presence – and capitalise on the company's strong roots in its established markets.
Typical deal for the well-performing Growth Fund
The Growth Fund typically invests alongside founders and management in businesses worth up to $200 million. Its portfolio includes a stake in Laser Clinics Australia, fuel storage tanks company FuelFix, dental roll-up Ekera Dental and car-sharing operator GoGet.
The Growth Fund managing partner for NSW, Tim Spencer, is expected to join the new Royan Group board.
The mooted deal comes as private equity firms have spent the past few years running the ruler over Australian smash repairers – although the focus had been on crash repairers like AMA Group and ex-Suncorp Group-owned Capital SMART, rather than truck repairer Royan.