private equity buys emeco

Emeco's $500m sale creates 2004 record
December 20, 2004 - 3:24PM


Earthmoving equipment provider Emeco International Pty Ltd has been sold to two private firms for nearly $500 million in the biggest private equity transaction of 2004.

Emeco was purchased by a 50:50 joint venture between GS Private Equity and Pacific Equity Partners (PEP) for a price understood to be in the mid to high $400 million range.

The firms said it was the largest private equity transaction in Australia for 2004.

PEP managing director Paul McCullagh 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," Mr 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 United States.

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 for Emeco," he said.

"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 United States and branch out into Europe.

"We have recently incorporated in the Netherlands, which we will probably use as a corporate base. From that we will launch into Europe generally," Mr Freedman said.

Mr Freedman joined Emeco in 1999 and has since turned around the business around.

"I was able to build a team from colleagues that I had worked with around the world over the years," Mr Freedman said.

"We have been delighted with the progress."

Emeco's sale has come at the end of a year that was dominated by the public arena, with the number of public offers of shares up more than 70 per cent compared to 2003, according to a recent Deloitte IPO Report.

"It's been a relatively slow year for private equity, as the public equity market has been so strong," said PEP's Mr McCullagh.

However he said the Emeco sale - the biggest ever 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," Mr McCullagh said.

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

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Emeco Parts specialises in supplying new, used and reconditioned parts.

Emeco Parts is a business unit of Emeco International Pty Limited. Our years of experience in the mining and the construction industries allows us to provide effective, trouble free solutions to the supply and disposal of earthmoving machinery and parts.

We specialise in recycling late model Caterpillar machines for parts as well as a range of surplus new and reconditioned components.

We offer immediate hassle free solutions to the disposal of single machines or complete job sites. Once machines are received on our site, they are dismantled, inspected and sold with a guaranteed service report.

All our items are sandblasted and painted before dispatch and we have an onsite idler rebuilding facility.

We have overnight services to Sydney and Brisbane daily, with connections to most regional areas. For urgent deliveries we offer courier services up to 8 tonnes at competitive rates. Air and sea freight is available to and from anywhere in the world.