Private equity finally delivers some deals, led by V8 Supercars buy

There’s been a flurry of private equity activity this week, after a dour couple of years in the Aussie market.

Archer Capital, one of the country’s biggest private equity firms, has become the new majority owner of V8 Supercars, snapping up a 60% stake yesterday.

Archer director Andrew Gray says while it is a long-term and patient investor, it expects the motorsport’s “impressive” growth to continue.

International expansion plans and a sweetening of its media rights appear to underpin the confidence. V8, which holds races in Australia, New Zealand and Abu Dhabi, is expected to enter the US market and add international races to its calendar.

Channelling the Australian Football League’s success in lifting its media rights contract to $1.2 billion, V8 Supercars Australia chairman Tony Cochrane has flagged a “very aggressive” approach to its media rights across all platforms when its key contracts expire at the end of next year. Channel Seven, Premier Media and Telstra’s BigPond currently have deals with V8.

“In Australia today, sport is God on TV,” Cochrane said yesterday. “The AFL just recently proved how effective you can be.”

Broadcast rights reportedly account for 20% of V8’s revenue. It says an average 126,000 spectators attended rounds in Australia and New Zealand, and an average of 470,000 viewed tuned into championship events last year in the five mainland capital cities. 

An Archer spokesman this morning declined to name specific growth targets for the broadcast contract. “There’s a lot to be done domestically and internationally,” he said.

Under the deal, which values V8 at $300 million, Sports & Entertainment will sell its 25% holding, and 18 racing team will trim their holding to a combined 40%.

The price of 10 times next year’s forecast profits is seen as a good one of the vendor, which took on a troubled business more than a decade ago and turned it into Australia’s fourth-largest sporting television audience.

Archer, which has about $2 billion in funds under management, was in the news recently for offloading its Cellarmasters business to Woolworths. Its other assets include MYOB and Rebel Sport.

But the Australian Financial Review also reports that Archer is one of many private equity firms to have cast an eye over Quick Service Restaurants throughout 2011, which is set to be sold by Quadrant Private Equity.

The paper is tipping a float rather than a trade sale for the Quick Service Restaurants, the company behind Red Rooster and Oporto which is valued at between $400 and $450 million. Earnings before interest, tax, depreciation and amortisation of more than $40 million for the asset are tipped to be met next year.