Investor Colin Neal on Polar Capital’s acquisition drive

Businessman and serial investor Colin Neal says his investment company Polar Capital is gearing up to add another business to its rapidly growing portfolio.

He is gaining a reputation for taking punts on underperforming businesses such as NZX-listed Moa and Mercer Group and will be one to watch over the coming years.

Polar Capital, which already owns retail chains Smiths City and Pricewise and a string of other businesses including food manufacturers, will next week formally acquire a tourism business – an undisclosed campervan company.

Neal, who found his feet – and wealth – through the sale of refrigerated transport company Big Chill Distribution, which he sold to Freightways at the end of last year for $117 million, says the company is on the hunt for new acquisition opportunities.

The campervan business will be the company’s third purchase this year – and Neal says Polar Capital isn’t stopping there.

It is actively looking for other companies to acquire or invest in.

He has business sale memorandums on his desk daily – about five or six a week – and says he is looking at firms from a range of industries, and is driven by the idea of keeping people in jobs and businesses in New Zealand.

He describes the upcoming acquisition, along with recent retail business takeovers, as “a change in direction” after owning Big Chill for 25 years. He grew the business from a single truck to a fleet of 280.

“If I didn’t sell Big Chill I wouldn’t have the capital to do what I wanted to do,” Neal says, adding that he was motivated by people and keeping people employed.

“We are business people but we are looking at saving jobs. There are a few other businesses that we are looking at buying, that are struggling, just to save jobs.

“Yes Covid is hard, business is hard but I’d like to do what I can to [help].”

Neal says Polar Capital has been able to save and create more than 700 jobs through its acquisition deals this year and it was “a good feeling” given the uncertainty the economy was feeling after seven or so months of disruption from the pandemic.

Smiths City was sold to Polar Capital in May for $60m after Covid-19 forced the retailer into receivership. As part of the takeover deal, more than 100 staff were made redundant and seven stores were closed.

Neal says this was necessary for the longevity of the business, and that the reason why he decided to acquire the business was the ability to “save 400 jobs”.

Initially, however, he had no intention of taking on the chain. “I was looking for something new and [Smiths City] came across my desk. I was not thinking about buying Smiths City outright, I was actually thinking about investing in it – I thought it was undervalued dramatically but, as I found out, if I had invested in it, it would have been a debacle so I ended up owning the whole thing and I’m happy.”

Neal and the Smiths City team have spent the past few months rebranding and “tidying the businesses up”, and have reopened three new stores.

In September, Polar Capital acquired discount toiletry chain Pricewise for an undisclosed sum. Prior to that, it was Pricewise’s biggest shareholder. Neal also personally holds a 23.5 per cent stake in NZX-listed firm Moa and a 19.9 per cent stake in Mercer.

Like Smiths City, he says, he thought Moa was undervalued, and had been looking at the brewing and restaurant business for a long time as it had synergies with Polar’s food retailing businesses Bay Cuisine, Exquisite Foods, Esk Valley Meats and South Island Fresh.

“Moa is not just a brewery anymore, it is very much a brewery and restaurants, and I think there is more strengths in the restaurants side. We’ve got a lot of synergies and crossovers,” says Neal, adding that he was not looking to increase his stake in either Moa or Mercer.

He has been on the board of Mercer for about six months. What Mercer had achieved with its share price in the past six months is similar to Smiths City’s turnaround, he says.

“I was not intending to be busy once I sold the refrigerator business, but I have ended up being very busy,” says Neal.

Next week he is set to get even busier, when Polar Capital releases information on its latest acquisition. He kept the details under wraps but told the Herald it was a “big buy” and a campervan business.

Neal now sees himself as on a mission to transform businesses while keeping Kiwis employed. Polar has one acquisition on the go and “three or four” angel investing businesses that it is looking at. He says he has no plans to slow down anytime soon.

He says he is up for the challenge that a tourism business may bring. It is also an area he is familiar with as he owns a hotel overseas.

“Disaster creates opportunity and if you can handle [uncertainty] in the next two to three years then you will come out of the rabbit hole pretty well.”

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