In November 2015, Next Capital completed an investment in Lynch Group, Australia’s largest wholesaler of floral and potted products. Lynch is a 3rd generation business which has been in operation for almost 100 years. The business originally began as a flower grower and moved into theflower distribution segment in 1984.
Lynch operates as a high value-add wholesaler to customers in key growing end markets, namely the mass-market retail channel, which is seen to be outpacing the growth of the broader floral sector. Lynch has also established an industry leading floral propagation and growing facility in Kunming, China, which grows high quality produce at a material cost advantage to local supply.
Lynch has been successful in driving double-digit organic growth among its core wholesale business. Next Capital has made an investment with a view to backing the current management team to continue this organic growth while incrementally supporting a number of capital expansion opportunities across the Chinese farming operations as well as expansion strategies into new channels which are under serviced by the current industry structure.
Investment highlights include:
- Dominant market position – roughly 8 times the size of nearest competitor
- Profitable and growing sector dynamics
- Significant barriers to entry at both sides of the value-chain
- Multiple growth opportunities – both organic and inorganic
- Extended track record of profitability and growth
- Partnership style transaction structure alongside a strong existing management platform