CASE STUDY

TOTAL EDEN PTY LIMITED

Overview

  • Total Eden was acquired by Anchorage Capital Partners Fund I in February 2011
  • Anchorage, together with management, successfully steered the business through a challenging period of business integration and performance improvement
  • Total Eden today is the largest pure play water business in Australia and provides end to end water management solutions across its two divisions, being Networks and Services
  • Total Eden was successfully sold to Ruralco Holdings Limited on 28 February 2014

Transaction background

In February 2011, Anchorage, together with management, purchased Total Eden for approximately $20 million.  Total Eden was previously the Water Products and Services division of Alesco Corporation Limited and was created through 14 separate acquisitions undertaken by Alesco in August 2007.  The transaction was a proprietary deal, sourced by direct approach to Alesco.

Business overview

Total Eden is the largest pure play water business in Australia and provides end to end water management solutions across its two trading divisions, being Networks and Services. The Networks division currently comprises 37 retail stores and 4 distribution centres in WA, NSW, QLD, VIC and SA.  The Services division provides water solutions to a broad range of customers including government, agriculture and mining across Australia and New Zealand.  

Turnaround program

At the time of Anchorage’s acquisition, the performance of the business had been significantly impacted by a range of factors including exposure to unfavourable weather events, lack of acquisition integration and disengagement of owners and managers.

Anchorage saw the opportunity for significant operational turnaround upside in Total Eden. The major sources of earnings improvement were identified as a combination of revenue uplift and margin improvement by targeting new products and markets and improving execution to enhance operating efficiency. The long term demand dynamics of the business were also considered to be favourable, driven by water scarcity, increased need for water efficiency and increasing government spend on water infrastructure projects.

Key aspects of the comprehensive business turnaround program included:
  • A heavy focus on improving organisation culture, controls and performance
  • Rebranding the entire business with the Total Eden name1
  • A store refurbishment program to create an enhanced retail experience
  • Consolidation of information technology platforms
  • Improving supply chain and inventory management
  • A more streamlined, differentiated product offering
  • Reduction in cost of doing business
Over the term of its ownership, Anchorage, together with management, executed initiatives to position Total Eden for further growth, including:
  • Strategic acquisitions to improve the geographic diversity of the Networks division, and to expand the commercial landscaping area of the Services business
  • Build out of existing engineering capabilities in water treatment solution design
  • Greenfields expansion to the South Island of New Zealand

Financial performance

The turnaround initiatives outlined above delivered meaningful improvements in earnings and margins and have significantly improved the quality of the business. After realising an operating EBITDA loss of close to $1.0 million in FY2011, the year of Anchorage’s acquisition, at the time of sale Total Eden is forecast to achieve an operating EBITDA of $8.2 million in FY2014.2

Exit

Anchorage achieved a successful sale to Ruralco Holdings Limited in February 2014, exactly three years after the business was acquired.  Ruralco is considered a natural long-term owner of the business given its extensive regional rural branch network.


1 Previously East Coast and West Coast operations traded as different brands
2 Total Eden management forecasts, as set out in Ruralco’s Investor Presentation lodged with ASX on 13 February 2014.