ACC-backed Allegro sees Carpet Court as potential listing opportunity
By Paul McBeth
Sept. 21 (BusinessDesk) - Allegro Funds, the Australian private equity firm that counts the Accident Compensation Corp's
investment arm as an investor, is optimistic its latest New Zealand investment, Carpet Court, is a candidate for
potential listing once the flooring retailer has been whipped into shape.
The Sydney-based firm bought New Zealand's Carpet Court in July in a deal to recapitalise the firm and leave it
debt-free after the transaction. Allegro co-founder Chester Moynihan told BusinessDesk the company has about 25 percent
of the New Zealand market, which is highly-fragmented with a number of small, family-owned operators. Allegro typically
targets companies it sees as "capable of transformation" that can be realised over three to five years through a trade
sale or initial public offering.
"Carpet Court is a real opportunity to improve the business, to invest in the business, and to drive growth both
organically and also through bolt-on acquisitions," Moynihan said. "What we want to do in the investment timeframe is
improve operations and grow to the point where it's ready for a float. We like the fact it's the market leader."
The investment is the third by Allegro's second fund, which closed with A$180 million in June, including a commitment
Carpet Court sells a variety of flooring products across 60 outlets nationwide, employing more than 400 staff, and is
led by veteran retail executive Rob Smith.
The flooring firm is in a sweet spot at the moment as the country's house building boom drives up demand for household
goods, with retail spending on furniture, floor coverings, houseware and textiles at a record $2.14 billion in the year
ended March 31.
Moynihan said consumers take a much more considered approach in making carpet purchases than many other retail
transactions and typically want a more tactile experience when choosing their carpet.
Carpet Court is Allegro's second investment in New Zealand following the firm's recent sale of three assets - Cowley
Services and Trilogy Building Services, and Spectrum Fire & Security in Australia - to France's GDF Suez. It owns 87.5 percent of Carpet Court, with the remaining 12.5 percent
held by interests associated with director Stefan Preston, who helped turn around the fortunes of lingerie maker Bendon.
Moynihan sees New Zealand as an attractive investment destination, citing the strong leadership of Prime Minister John
Key and his deputy and Finance Minister Bill English.
"They're sensible leaders that have the economy's well-being at their heart," he said. "It's not a small factor in us
being comfortable to commit to this investment."