PRIVATE equity backing has enabled Vesco Foods to make the transition from a locally focused family business to a national player in the food services manufacturing sector.
PRIVATE equity backing has enabled Vesco Foods to make the transition from a locally focused family business to a national player in the food services manufacturing sector.
The business traded for 35 years under the Kailis & France Foods name.
Its ownership changed in 2004 when CHAMP Ventures and Foundation Capital backed a management buy-out led by then managing director Geoff Leding-Wilton, which enabled the Kailis and France families to focus on their fishing and other interests.
An even larger change occurred in 2006 when CHAMP invested a further $15 million into the business so that it could buy Melbourne-based Australian Convenience Foods.
A year later the company rebranded, changing its name to Vesco Foods.
Vesco chief executive Bernie Pummell, who has a background of working in multinationals including former Fonterra subsidiary Peters & Brownes, is a big fan of private equity ownership.
Mr Pummell said working in a private equity company was exciting because it provided a fast-paced environment that was more aggressive and invigorating.
“There’s a sense of urgency about things,” he said.
“[The owners] also tend to back and support initiatives without the complexity [of multinationals].”
The backing of a supportive shareholder has been important for Vesco, which has come through several tough years of trading.
Difficult economic conditions caused Vesco to withdraw from the coated fish products market and shut down that part of the business at Osborne Park in 2008.
CHAMP Ventures executive director Mr Stuart Wardman-Browne said it had been a particularly difficult time for the company.
“A few years ago Vesco was really struggling due to raw material costs rising and an awful lot of price pressure from supermarkets and consumers,” he said.
“There was also a lot of pressure on human resources because of the mining boom.
“All you can do when there’s all those external influences is control what you can control and focus on doing what you do best.”
Mr Pummell said the company was forced to go back to basics and look for existing opportunities. A decision was taken to target the meals component of its operations.
The business has since focused on diversifying its offering significantly by developing niche brands for customers in the retail and food services sector.
The group also restructured so that Vesco, which is the frozen foods and sauces sector of the business, has been separated from ACF so that it can focus on its offering of fresh foods such as salads and wraps.
“They have been restructured to become independent and to focus respectively on their business,” Mr Pummell told WA Business News.
Mr Pummell said it also made sense for Vesco to take on the frozen food part of ACF’s business, which was a substantial frozen and microwaveable foods business.
As part of the restructure the decision was made to move this part of ACF’s business from Melbourne to Vesco’s production facility in Perth.
Some equipment was moved over from Melbourne and CHAMP also invested a small amount of money in Vesco to facilitate this.
Full production started at the revamped production facility in Osborne Park last week.
Mr Pummell said the changes would enable Vesco to grow its business substantially. It has added two new food brands as a result and has plans to employ an additional 20 to 30 staff.
