Exit of the Year – Small Cap (Equity commitment on entry – below $50 million)

Arq Group (Quadrant Private Equity)

Quadrant Private Equity sold Australian IT enterprise services business Arq Group to NCS Group, an IT and communications engineering player, for an enterprise value of USD 197m in May 2022. The GP carved out the business from its parent in a USD 28m deal two years earlier. It integrated cloud, data, and digital divisions to create an integrated offering and a unified go-to-market approach; completed one add-on acquisition and supported organic expansion into New Zealand; realised efficiencies by updating systems and processes; accelerated ESG initiatives; and attracted new leadership talent by improving management incentive plans. The return was 6.1x.

CosmoLife (Advantage Partners)

Advantage Partners sold CosmoLife, a Japan-based supplier of filtered drinking water, to a corporate investment unit of Tokyo Electric Power (TEPCO) in January 2022 for an undisclosed sum. The return is said to be approximately 12x. Advantage acquired CosmoLife from Orix Corporation in 2019 and introduced a water purifier rental business to complement the company’s existing spring water delivery operation. It also shifted decision-making to focus on life-time value structure, introduced key performance indicators tied to digital initiatives, updated product design, and rolled out environmental and sustainability-related programmes. CosmoLife’s EBITDA increased more than threefold during the holding period.

Guardian Hygiene Service (Jade Invest)

Jade Invest sold Guardian Hygiene Service, China’s largest domestic pest control business, to EQT in March 2022, for an enterprise value of approximately USD 100m. The private equity firm, which acquired Guardian in 2018, generated a 3.3x multiple and a 40% IRR. Twelve add-ons were completed during the holding period with a view to achieving footprint expansion, greater service density, and service line expansion. Each acquisition also brought down the 2x entry price-to-revenue multiple. In addition, Jade helped drive a preventative approach to pest control, replacing pesticides with low-toxicity chemicals and introducing sensor-based rodent traps and remote monitoring systems.

Paidy (Arbor Ventures)

PayPal’s USD 2.7bn acquisition of Japan-based buy now, pay later platform Paidy in October 2021 facilitated exits for a string of private investors. They included Arbor Ventures, which first participated in a seed round in 2014 and re-upped several times. The specialist financial technology investor claims to help start-ups secure strategic backers, and this proved to be the case with Paidy as the likes of Itochu Corporation, Goldman Sachs, and Visa joined the shareholder roster. The company established a dominant position in Japan, accumulating 6m registered users. Equity and debt funding at the time of sale was USD 585m.

StraitNZ (CPE Capital)

CPE Capital exited StraitNZ, a ferry and logistics operator that runs services across the Cook Strait between New Zealand’s North and South Islands, to Morgan Stanley Infrastructure Partners (MSIP) in March 2022. The GP committed less than AUD 50m (USD 31m) in equity to acquire three shipping businesses in 2016 and it exited at a reported enterprise valuation of NZD 500m (USD 348m). It created a single corporate structure, modernised management, secured longer port access and customer contracts, improved vessel utilisation and yield, and realigned road operations. A recapitalisation and a partial exit facilitated two realisations during the holding period.