The growth of private equity

Three years since troubled Victorian company Patties Foods was delisted from the ASX following a private equity takeover, the company is in a much better place. Bought out by Pacific Equity Partners (PEP) for $232m in 2016, the Bairnsdale producer of the iconic Four’N Twenty pie is one of a growing number of companies private capital has removed from the ASX in the past three years.

New investment in equipment upgrades and capacity expansion — close to $70m in Australia and New Zealand in the 2018–19 financial year — has turned the company into the world’s largest savoury pie bakery. Patties’ new owners say the investment is paying off. Helped by a range of new flavours such as craft beer-infused pies, annual revenue growth has surpassed seven per cent after sitting at under five per cent before the acquisition.

Tony Duthie, managing director of PEP, argues private ownership has made it easier for the company to launch innovative new products and marketing campaigns. “In a private environment, you have more willingness and capacity to take well thought-through risks to grow the business on a longer-term basis,” he says.

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This article appeared in the February issue of Company Director magazine, the member magazine of the Australian Institute of Company Directors.