News & Analysis

Gresham- and Ironbridge-backed company fails to stay afloat

Debt and declining consumer demand has sent Australia's Riviera Group into receivership. It marks the second private equity-backed yacht investment to sink in 2009, the first having been Candover- and Permira-backed Ferretti in February.

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Australian boat builder The Riviera Group, a portfolio company of Australian private equity firms Gresham Private Equity and Ironbridge, has entered into voluntary receivership.

Founded in 1980, Riviera designs and builds luxury yachts between 33 feet and 70 feet in length. The boats are sold in Australia and exported to more than 30 countries, with the US being a significant overseas market.

Riviera, which has axed approximately 320 jobs from 2008, has seen demand for its boats decline over the

Riviera: In receivership

last 6 months to 12 months. The business has also been impacted by a high level of debt owed to banks Australia and New Zealand Banking Group (ANZ) and The Bank of Scotland, according to a spokeswoman for Deloitte, the company’s receivers. The total amount of debt has not been tallied, she added.

Deloitte has received expressions of interest for Riviera. However, the best return to creditors given the current economic climate, would likely come from a restructure and turn around of business operations, rather than an immediate sale, Chris Campbell, receiver and manager of Riviera, said in a statement.

Riviera will continue business as usual and a restructuring plan will be developed over the next few weeks, he added.

In 2002, Gresham led the A$180 million ($135 million; €100 million) management buyout of Riviera, with GIC Special Investments, the private equity arm of the Government of Singapore Investment Corporation. In 2006, GIC Special Investments sold its stake in Riviera to Ironbridge.

Ironbridge declined to comment. Gresham and Riviera did not reply to requests for comment at press time.

In February, UK buyout house Candover wrote off the entire value of its 50.2 percent equity stake in Ferretti, an Italian yacht maker. Candover and buyout firm Permira, which held a 10 percent stake in the company, were not involved in Ferretti’s restructuring plans.

In August 2008, Middle East private equity firm Abraaj Capital acquired a 50 percent stake in Numarine, a Turkish yacht maker, for an undisclosed sum.  
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