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Eco Investor June 2015 Unlisted Companies Private Equity Acquires Solar InstallerPrivate equity group Anchorage Capital Partners has completed the acquisition of photovoltaic installer Mark Group Australia Pty Ltd (MGA). MGA is a market leader in PV installations with operations across Australia, 104 staff and 52 sub-contractors. MGA was established in 2009 as a subsidiary of Mark Group United Kingdom (MGUK), and became available for sale after a restructure of the original family ownership of MGUK. Anchorage managing director Phil Cave said "MGA operates a strong platform within the solar installation sector with an established national footprint and a reputation for high quality service and products. With the current focus on renewable energy sources and energy efficiency, we see significant opportunity in the business for sustainable earnings improvement." He also said it has a high quality management team who are well-known in the sector. Robert Grant, the current chairman, will remain as chief executive officer. Anchorage will be represented on the board by Phil Cave as chairman and Callen O'Brien as non-executive director. Anchorage managing director Daniel Wong will chair the turnaround committee. Anchorage Capital Partners is a turnaround investor that manages $450 million in committed funds. It invests in companies with strong and established track records but are which not achieving their full potential. The companies have enterprise values of up to $250 million and Anchorage's sweet-spot is between $30 million and $100 million. It invests in all sectors except property, mining, technology/ biotech and early stage businesses. Anchorage's partners and investment professionals are experienced in company management, corporate strategy, management consulting and corporate finance and have had successful partnerships with many management teams. Water Turnaround Anchorage says that at the time of the acquisition, the performance of the business was impacted by factors including unfavourable weather events, lack of acquisition integration and disengagement of owners and managers. Following turnaround work by Anchorage and the company's management, Total Eden was sold to Ruralco Holdings in February 2014. Today it is the largest pure play water business in Australia and provides end-to-end water management solutions. Its Networks division has 37 retail stores and 4 distribution centres in WA, NSW, QLD, VIC and SA. Its Services division provides water solutions to government, agriculture and mining in Australia and New Zealand. On the turnaround itself, Anchorage says it saw the opportunity for a significant operational turnaround. "The major sources of earnings improvement were identified as a combination of revenue uplift and margin improvement by targeting new products and markets and improving execution to enhance operating efficiency. The long term demand dynamics of the business were also considered to be favourable, driven by water scarcity, increased need for water efficiency and increasing government spend on water infrastructure projects." These included: improving the organization culture, controls and performance; rebranding the entire business with the Total Eden name; store refurbishments; consolidating information technology platforms; improving supply chain and inventory management; a more streamlined and differentiated product offering; and reducing the cost of doing business. There were also strategic acquisitions to improve geographic diversity and expand the commercial landscaping service; improvement in engineering capabilities in water treatment; and expansion to New Zealand's South Island. On the financial side, from the year of the acquisition in 2010-11 to the time of the sale in 2013-13, the operating earnings (EBITDA) rose from a loss of close to $1 million in 2010-11 to a forecast $8.2 million.
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