CPE Capital gets into the fit-outs business with Modus Projects
Sydney private equity firm CPE Capital is closing in on a deal to acquire a facilities maintenance business throwing off annual revenue of more than $150 million.
Street Talk understands CPE boss John Haddock and his team are in late-stage negotiations to buy Modus Projects, a 320-person company that works with businesses like 7-Eleven, fashion retailer COS, Commonwealth Bank, Snap Fitness and Caltex Foodary. Sources said staff at Modus were told about the mooted change of control on Monday.
Modus was established by co-founders Brad Berryman and Troy Mayne in 2010 and now has 11 branches nationwide offering facilities maintenance services, construction, project management and fit-outs.
The business reported $10.9 million statutory profit in financial year 2022, up 10 per cent on the prior year, according to accounts filed with the corporate regulator, and paid $3.2 million in dividends to shareholders, which includes its staff.
Revenue jumped 55 per cent to $153.8 million, though so did expenses, up 58 per cent to $138.2 million owing to a steep rise in material costs and employee expenses. Modus is sitting on $4.5 million in cash.
Corrs Chambers Westgarth advised CPE Capital while PwC dealmaker Matt Millar was on side for Modus. Sources said the deal is still in train – signed but not completed. CPE Capital declined to comment on Monday.
Modus is well within CPE Capital’s wheelhouse. The private equity firm, formerly known as CHAMP Private Equity, seeks to acquire medium-sized businesses with an enterprise value between $100 million to $750 million.
Western Australia-based building repairs and insurance jobs business Inserve Australia sits under its wing, as does national insurance repair and restoration company Ambrose Construct Group. Inserve has been described as a smaller version of ASX-listed Johns Lyng Group, providing services to the insurance and home repairs industry across Australia.
Haddock keeps a low profile but has made solid returns for his investors in recent years. In May, CPE booked a big payday for its investors, selling used prestige cars dealer Dutton Group to Tokyo-based Sojitz Corporation for a sale price north of $250 million.
Other exits from CPEC 8 include Australian cracker business Gourmet Food Holdings, which it sold to American snacks giant Mondelez International for more than $100 million in 2021; freight business StraitNZ; and construction supplies business JayBro.
CPE has invested $4.3 billion since its inception in 1987. Across that 30-year-plus history, net returns on all exited deals have yielded a 21 per cent compound annual return.
