- The PieLAB Council Capital Fund to use financing to invest in and acquire SME businesses with recurring consistent revenue model
- PieLAB focused on evergreen fund model, rather than outdated closed vehicle structure
- PieLAB’s first fund, the PieLAB Real Estate Industry Venture Capital Fund, achieved a return of 32.4% p.a.
22 June 2022 – PieLAB Capital (‘PieLAB’), an Australian investment company focused on acquiring, holding and nurturing a diversified portfolio of SME businesses, today announced plans to raise A$75 million in financing for the PieLAB Council Capital Fund.
“The SME sector has the potential to deliver excellent risk adjusted returns, but it has historically been a difficult asset class to efficiently access,” said Chris Rolls, Founder and Managing Partner, PieLAB Capital. “PieLAB are one of the few investment firms in Australia providing family offices and HNWIs with the ability to deploy capital to the lucrative SME asset class, without taking an active, hands-on approach”.
The PieLAB Council Capital Fund has to date invested A$19 million across four key SME acquisitions and is now seeking to raise additional capital to further grow the Fund through a range of new SME acquisitions.
The PieLAB Council Capital Fund is looking to invest in and acquire SMEs that have long-term owners looking to establish a strong succession plan, grow their business further, and nurture talented staff. PieLAB targets SMEs with revenue of between A$3m to $15m, profit of at least A$1million EBITDA annually, and a recurring, consistent revenue model.
Mr Rolls added, “Due to the large number of SMEs in Australia, it is relatively easy to find businesses with a history of stable revenue that have a strong history of profitability”.
Over the past 12 months, PieLAB has reviewed more than 350 potential portfolio companies across a diverse range of sectors including commercial fire services, financial planning, commercial pest control and IT managed service providers. The Fund expects to acquire approximately 10 new portfolio companies with the new capital raising and is targeting a return of 18% p.a for the Fund.
The offer is expected to be supported by a number of high-net worth investors and family offices. The equity raise has already attracted strong verbal commitments from 90% of PieLAB’s existing investors who are expected to contribute more than 50% of the capital.
400,000 retiring boomer business owners seeking new ownership
PieLAB estimates that up to 90% of Australia’s 5.3 million Baby Boomers will retire by 2029, but for many this will first require the sale of their businesses, with at least 400,000 businesses looking for new ownership.
“That is a lot of small enterprises needing a new and safe pair of hands”, said Mr Rolls. “This generational transition of business assets provides a significant opportunity to build a portfolio of SMEs with strong earnings histories that can often be acquired at 3-to-8 times EBITDA multiples.”
PieLAB’s evergreen business model
Unlike other private equity firms, PieLAB has long advocated an evergreen model where the fund has an indefinite life, rather than a cycle of raising capital, making investments, managing investments and then exiting – only to raise capital again.
According to Marcus Simpson, Chair of PieLAB Council Capital Fund (and former Global head of Private Capital at QIC), “We don’t want to exit perfectly good, dividend-yielding businesses in a particular timeframe. At PieLAB, we have a buy, grow and hold strategy. Before making any investment, we ask ourselves – would we be happy to own this business forever?
Our investors are focused on long term success and the PieLAB evergreen model allows us to hold onto companies and capture more of the upside in the future.”
PieLAB’s first fund, the PieLAB Real Estate Industry Venture Capital Fund, has achieved a return of 32.4% p.a., as at 31 March 2022. The goal of the PieLAB Council Capital Fund is to create a $1 billion ASX-listed diversified investment company comprising Australia’s best recurring revenue SMEs by 2030.
For more information about PieLAB Capital, please visit: www.pielab.com.au
+61 (0) 499 084 400
About PieLAB Capital
PieLAB Capital (PieLAB) is an Australian investment company focused on acquiring, holding and nurturing SME businesses with strong free cash flow. The firm’s unique investment proposition provides family offices and HNWIs with the ability to deploy capital to this lucrative SMEs asset class – without taking an active, hands-on approach.
PieLAB’s first fund, the PieLAB Real Estate Industry Venture Capital Fund, achieved a return of 32.4% p.a (as at 31 March 2022) and is now fully allocated and closed to new investors. The PieLab Council Capital Fund has to date invested $19 million across four key acquisitions and is now embarking on a process to raise $75 million in capital to further grow the Fund via new acquisitions.
Based in Brisbane, the PieLAB team has an excellent track record of starting, operating, investing in, and growing businesses across a range of industries.