Private equity firm gains $500 million for transformation task
The chase for Toll Global Express appears to have ended, with Toll Group agreeing to sell the operation to private equity fund manager Allegro Funds.
Allegro says it has raised $500 million in funding to complete the separation and transformation of the business, with the deal’s completions expected on June 30.
Other national and international private equity players were reportedly interested the business, along with logistics players, but the sheer size of an operation that scored $3.2 billion in revenue seems to have tipped the balance towards the former.
Toll chairman John Mullen notes the agreement is consistent with Toll’s strategy to focus on its Asia-Pacific logistics strengths and fits with Allegro’s “investment thesis” of investing in Australian and New Zealand companies to realise their potential.
“We have spent the last three years transforming and strengthening Global Express and today the business is a market leader,” Mullen says.
“I am confident that under Allegro’s ownership, Global Express will have the support and focus it needs to reach its full potential.
“The divestment is consistent with Toll’s strategy to focus on being a pre-eminent Asia-Pacific logistics provider through its core businesses in contract logistics and freight forwarding.”
The Global Express business provides express parcel, freight delivery and domestic forwarding services in Australia, and transport and contract logistics services in New Zealand.
Read about Toll’s progress in its uphill financial struggle, here
Allegro has appointed Adrian Loader, one of Allegro’s founding partners, to chair “the new company”.
“The business has faced challenges, but we are excited by the opportunity ahead and have great confidence that Toll Global Express can realise its full potential,” Loader says.
“Allegro is committed to a transformation program, underpinned by $500 million in funding to support and grow the business.
“The business has high quality assets, is number one or two in its core market segments and will be supported by strong local management.”
Allegro said its plan to continue to transform Toll Global Express would begin by “listening to the company’s customers, employees and partners”.
“We are acutely aware that the business plays a vitally important role for its stakeholders across both sides of the Tasman, and on both sides of Bass Strait,” Loader says.
“We are confident that with strong local focused management the business can achieve operational and financial improvement at the same time as enhancing the experience for customers.”
In the weeks up to completion, Allegro will focus on satisfying the remaining sale conditions, and then meeting key stakeholders to understand their insights on the business.
Toll and Allegro say they are committed to ensuring that the transition is seamless for customers and that service standards are upheld throughout the transition.
After completion, Toll Global Express will be renamed.
“Under the terms of the sale, Allegro will operate the Global Express business under the Toll brand for a two-year transitional period,” Toll says.
“Toll’s Global Logistics and Global Forwarding businesses are not impacted by today’s announcement.”
Allegro says the transaction is fully funded through a combination of its own funds and debt backed by Commonwealth Bank, Scottish Pacific and Gordon Brothers.