Platinum Equity’s Presence During Diligence Key in JELD-WEN Carveout

SYDNEY ‑ JELD-WEN, a U.S.-based, publicly traded manufacturer of windows and doors, decided to divest its Australasian business in 2022, which set off a competitive sales process.

The process was a chance for Platinum Equity to demonstrate that its operations-intensive approach not only comes into play after an acquisition – it’s also a key differentiator during the diligence stage. According to executives with the company (now branded Ventora Group), Platinum Equity’s extensive engagement with management and visits to plant sites before the acquisition was unique.

“We spent a lot of time with the Platinum team throughout the due diligence process, not only here in Australia, but in our Asian facilities also,” Ventora Group CEO Scott Kelly said last year during a tour of a company showroom. “Platinum was the only team to visit as many sites as they did and to really understand the product, the market, the operations, and the entire value chain. They really took the time to understand what makes our business tick.”

“Platinum took time to understand the complexities and the nuance of the business and the market, and as a result they have deep insights into how things really work. Seeing a presentation is one thing, but it’s quite another to sit with team members and talk about about how the job works.”

Platinum Equity announced the closing on the $461 million acquisition in July.

“We are pleased to have provided a divestiture solution to JELD-WEN as the company continues to streamline and simplify its business,” Platinum Equity Co-President Louis Samson said when the deal was announced. “Platinum has decades of experience with corporate carveouts, and we expect a seamless transition. We are excited about the prospects for the Australasia business as a standalone company.”

Ventora Group is a leading Australian designer, manufacturer and distributor of windows and doors. It employs approximately 5,000 people and comprises 41 manufacturing locations across Australia, Malaysia and Indonesia. Brands include Corinthian®, Stegbar®, A&L®, Trend® and Breezway®, among others.

Several of the business’s brands are leaders in the production and innovation of energy efficient windows and doors. Recent increases in Australian energy efficiency standards could be a potential tailwind for the new company.

“New regulations are coming into effect in Australia requiring improved energy performance in homes, and consumers increasingly appreciate the benefits of energy efficient products,” Platinum Equity Managing Director Adam Cooper said. “The business is well positioned to capitalize on those trends and continue investing in innovation, which is good news from both a financial and sustainability standpoint. A growing population, historically stable economic growth, and nationwide demand for additional housing across the country make us confident in the long-term outlook for the business.”

The investment is another example of Platinum Equity’s ability to navigate complex carveout transactions as Ventora Group joins Club Car, Calderys, LifeScan and other portfolio companies that were once part of a larger corporate seller.

“Platinum was the only team to visit as many sites as they did and to really understand the product, the market, the operations, and the entire value chain. They really took the time to understand what makes our business tick.”
Scott Kelly, CEO, Ventora Group

Cooper said Platinum Equity’s history in Australia combined with its experience in the building products industry (Cabinetworks, Paramount Global Surfaces) makes the firm a great partner for Ventora Group.

“We have been investing in Australia for nearly a decade, we know the market and are committed to putting our financial and operational resources to work in the region,” Cooper said.

Platinum Equity’s current portfolio also includes Winc, an office products provider formed through a combination of Staples and OfficeMax assets Platinum Equity acquired in Australia and New Zealand. Platinum Equity previously owned Sensis, an Australian directories business the firm acquired from Telstra.

During a recent visit to Australia, Kelly and other senior executives said that the company is eager to partner with Platinum Equity to fully unlock the company’s potential.

Kelly and Cooper both spoke recently about the company’s future.

(Questions and answers have been edited for length and clarity).

Q: How was that deal sourced?

Cooper: That deal was sourced through Macquarie Capital, one of our strong relationships in Australia. We work with our business development group to maintain relationships with all the large investment banks in Australia to ensure they are thinking about us as opportunities arise and they understand who we are, what we do, and our interest in Australia. When a transaction surfaces that fits our profile, we get the call and the opportunity to assess our level of interest.

Q: Why was it a Platinum Equity deal?

Cooper: When it comes to Australia, the business needs the potential to scale, which is one of the challenges in Australia given the overall size of the market. There’s not as many large companies in the country which has a population of 26 million people, so it’s got to be a large transaction on a relative basis. We like some level of complexity. Australia has quite a few private equity firms. They’re well capitalized, they’re very comfortable doing regular transactions, but few have the appetite to do the more complex carveouts or deals with other tricky transaction dynamics. All those things checked the box when we were evaluating the JELD-WEN transaction. It was a large, complex carveout, and in an industry we know well with the overlay of a challenging M&A environment.

Kelly: When you combine Platinum Equity’s experience in carveouts, the building industry, and their knowledge of the Australian market, it was clear that Platinum Equity was the right fit for us. The ops focus gave the team here in Australia a lot of belief that Platinum Equity would assist us in unlocking value. This has been reinforced since the deal closed and we work together to unlock that value for all stakeholders.

Q: With the slow M&A market, how did you get the JELD-WEN carveout across the finish line?

Cooper: We began the transaction in the summer of 2022. It didn’t close until July of 2023, but the most intense period of our engagement was at the end of 2022, first quarter 2023. That was a very slow time in the market. The debt markets were in the risk-off position. Many firms, including ourselves, had hands full with portfolio companies. We dug in, did the work to find solutions, which ultimately led to the successful closing of the transaction in the second quarter of 2023.

Cooper: We were able to craft creative financing, utilizing a sizeable portfolio of real estate assets within the company to structure a transaction that worked well given the market conditions. We effectively sold the real estate at a very attractive value and coupled the sale with conservative bank financing to fund the transaction. We acquired the business at an attractive value, with very low leverage in a challenging market. As a result, the business is well positioned with a conservative capital structure and good liquidity to manage through the expected building cycle.

Q: Management cites Platinum’s presence during the diligence process as a key differentiator.

Cooper: We like to be in-person, we like to get to know people and the culture, and we like to see the operations and facilities. If that means going to a dozen facilities, we do that. When you visit those facilities, it gives you a sense for the quality of the assets and the people driving the business. You also get to see the range of capabilities that they have across the organization and identify opportunities for improvement.

Q: Explain Australian energy regulations. Why are those regulations an opportunity for Ventora Group and Platinum Equity?

Cooper: The new regulation is called the 7-star energy rating. The market is currently transitioning from 6-star to 7-star on a regional basis. There is the potential of going to 8-star at some point in the future. It’s all about energy efficiency and how to minimize the amount of energy that’s lost through the exterior of a home. In the past, in many areas, builders have been able to address energy efficiency requirements through coated glass, insulation, or changing the roofing or other exterior materials. With the new regulations, the only way to achieve that is through the windows. The more energy-efficient windows are either dual-pane, or in some cases, thermally broken products. These products utilize advanced technologies with higher prices and better margins. With the technology that Ventora Group has developed and the investment that we’re making in capacity, they’re well positioned to take advantage of this market opportunity.

Kelly: As we go from six stars to seven stars and move away from single-glazed, non-coated glass to double-glazed coated glass and thermally broken product, we create a very powerful value program for our customers and ultimately homeowners. The Australia economy has not kept pace with most other developed economies when it comes to energy efficiency in residential dwellings. This is right in our wheelhouse, and we are well positioned to help our customers transition into value creation through glazing and achieving 7 stars.

Q: What areas require major investment?

Cooper: Ventora Group is a leading, well invested asset in its space. Our goal is to make it great and we’re going to do that through supporting them with investment in their technology, capabilities, and capacity. They’ve developed technology for the next generation of windows, and now they need to invest in the buildout of the capacity to take advantage of that market opportunity. The IT systems also need to be improved to fully capitalize on the company’s potential. In addition, we are going to support them by adding more automation to their production environment.

Kelly: We’re a business that’s been built with acquisitions over many years with multiple systems and product nuances. One area that we will focus on will be operational excellence that drives value for customers. This involves many things, but we will be looking to consolidate systems, deliver on automation and mechanization, as well investing in programs on building sites to help our customers remove cost in the installation of our product. Having Platinum Equity looking from different perspectives and sharing learnings from other portfolio companies can only help take that operational excellence to another level.