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HRV gets hungry for growth

NZN 6/07/2016

HRV is on the acquisition trail with a planned roll-up of small companies in the retrofit healthy home sector and a potential listing on the sharemarket.

The Auckland-based company, which was started by two entrepreneurs in 2003 selling home ventilation directly to householders, has already bought four businesses in the past two years, expanding into water purification, window double-glazing, and heat pumps.

A roll-up is where investors, typically private equity firms, buy up and merge small companies in the same market.

HRV is planning to expand its latest acquisition, Auckland heat pump specialist Energy Efficient Solutions, nationwide later this year.

Retrofitting homes is gaining traction at the "political awareness level", says chief executive Bruce Gordon.

Labour's Healthy Homes Guarantee Bill which would set minimum heating and insulation standards for rental homes expected to be voted on in October.

If passed, the bill is expected to drive more business for HRV, already looking to grow last year's $40 million revenue to $65m this year.

With franchisees, group revenue is forecast to rise to $85m.

Mr Gordon wants to buy companies in the "invironment space" with revenue in the $10m to $20m range and which may be short of capital for growth.

"We're interested in anything to do with retrofitting of homes from carpeting to drapes to solar."

Australian private equity company Equity Partners has a 60 per cent stake. Co-founder Michael Perrett retains 20 per cent and the balance is held by management.

Equity Partners was starting to think about exit options including an IPO, trade sale, or financial sponsor, Mr Gordon said.

Mr Gordon said expansion in Australia, where it has 7000 customers, was a "growth opportunity for someone else" because of the money required to build the brand and scale.

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