South African investment holding company Coast2Coast Capital is ramping up its operations in Australia, after acquiring local homewares wholesaler Albi in a sale with a price tag of more than $50 million.
The acquisition was completed through Coast2Coast’s Australian subsidiary Marlin Brands, and is part of the company’s longer plan to become a homewares market leader in Australia and New Zealand.
Coast2Coast Capital was founded in 2007 and has established investments in countries including Spain, Poland, and Hungary.
The company has three already established investment platforms, including healthcare company Ascendis Health, which has a market capitalisation of $600 million.
The company has also employed Greg Kerr, an ex-manager at Adidas, to manage Marlin Brands, which Coast2Coast eventually intends to list on the Australian Securities Exchange.
Albi was founded as a recycled glassware seller in Australia in 1985, and in 2000 it was bought by Martin Susskind and David Danziger.
During that time, the company changed its focus to home and kitchenware, and increased the amount of employees from six to 100.
Albi currently wholesales more than 40 brands in over 3000 stores across Australia, many of which are independent retailers. Albi’s own brands include Amalfi, Davis&Waddell, Emporium and Rogue, and the company also distributes Masterchef, Anna Gare, Tara Dennis and Stephanie Alexander branded products.
Danziger told SmartCompany Albi still has “plenty of work to do in Australia” and that the acquisition by Coast2Coast will help it achieve this.
As part of the acquisition, Coast2Coast signed on Albi’s executive team for a minimum of three years, which Danziger says is a “huge vote of confidence.”
“Coast2Coast like to buy companies with effective management and strong history, and our executive team has 15 years of experience between the four of us,” Danziger says.
“We’ve also managed to hold on to essential people in our business, which I think is key for good businesses these days.”
Danziger is confident Coast2Coast’s Australian expansion will be successful, citing the country’s strong economy as one of the many reasons.
“We do tend to sell ourselves a bit short here, but in reality we have low unemployment, a healthy economy and steady growth,” Danziger says.
“Coast2Coast has come up quite quickly, but they’re a well managed young team.
“They see Australia as a place to expand to after South Africa, as they don’t want to over-invest in that country.”
As for Coast2Coast’s plans to become Australia’s market leader in home and kitchenwares, Danziger says it will take time.
“The worst thing you can do is just rush in and pick up companies with a strong balance sheet for the sake of it,” Danziger says.
“You need to make sure the company has strong entrepreneurial management that can adjust.”
According to Danziger, Coast2Coast will be looking for “diverse complementary businesses” as part of its growth strategy, though the businesses will likely have “a bit of overlap”.
Albi won’t be staying dormant either, with Danziger saying his company will look to replicate itself in “different disciplines”, although he says that “won’t be an overnight job”.
Danziger believes that his company’s successful business model is the reason Coast2Coast sought to acquire it.
“We’ve got a good model for them to use and replicate in other parts of the world. Albi is the basis for a successful model,” Danziger says.
For the smaller businesses that Albi supplies to, Danziger says the acquisition will have “no effect”, instead saying it will provide them with confidence.
“Albi has put a focus on not being dependant on major companies, which is why we deliver to over 8500 SKUs,” Danziger says.
“Independent retailers are one of the main reasons Albi has such a wide reach, we’re not at the beck and call of some of the larger businesses.
“This move will benefit all the independents, they’ll have confidence in the fact we now have a ‘big brother’ to help us invest in new areas.”