Chicken franchise chains sold to private equity firm for $450 million deal

Quick Service Restaurants Holdings, the group behind the Red Rooster, Oporto and Chicken Treat food chains, has been sold by one private equity firm to another, suggesting the sector is still wheeling and dealing, but unwilling to float their assets.

Archer Capital, which recently paid about $180 million for a 60% stake in the V8 Supercars motor sport business, snapped up a majority stake in QSR from Quadrant Private Equity for an undisclosed sum, that is believed to be around $450 million. Management will keep its 10% stake.

Quadrant says the sale proved a much more attractive option than a float later in the year. Sharemarket conditions have been weak and successful floats over the past couple of years have been thin on the ground, as vendors choose trade sales over trying their luck with a nervous market.

Quadrant picked up the QSR business four years ago for about $110 million, and increased the number of stores to 620, from 450, making QSR the largest Australian-owned fast-food operator.

”We wouldn’t have put it to market until October or November, and it’s a very difficult market to pick,” Quadrant managing director, Chris Hadley, told The Age.

”We chose to sell it today for cash, rather than take the risk.”

Its new owners plan to continue the expansion, with Archer Capital partner Peter Gold this morning saying QSR has plenty of opportunity to improve its offering.

Others have pinpointed quick service restaurants as likely growth sectors, with Lorelle Frazer, director of the Asia-Pacific Centre for Franchising Excellence at Griffith University, recently tipping food would continue its good performance over the past few years, as people continue to reward themselves with cheaper meals.

Archer Capital, one of the country’s biggest private equity firms, recently bought hospital group Healthe Care from CHAMP Ventures. Its other assets include MYOB and Rebel Sport; according to reports, there is speculation the latter will be put up for sale in the next six months.

Gold says while a further acquisition is unlikely any time soon, it is continuing to look across all sectors for further purchases. Quadrant could not be contacted this morning before publication.