Roy McKelvie gone from Gresham Partners

Architect of the private equity creation of GEON cites “strategic differences” for his decision to leave the investment firm.

McKelvie’s departure marks the end of an era that saw the aggressive entry five years ago of large PE funds into the printing industry – notably Gresham PE with GEON and CHAMP with Blue Star. Gresham drove consolidation of the commercial sheetfed industry, buying the then NZ-owned Pacific Print Group for $203 million. A roll call of mid-sized printers around the country was rolled up into the high-profile aggregators, radically altering the industry dynamics.

The business plan was to grow the business by acquisition and investment to the stage where it could be floated on the stock exchange or otherwise sold on as a major corporation. The advent of the GFC put the kybosh on the float idea and the PE funds have since had to come to terms with owning and running two of the largest printers in the region.

McKelvie, former managing director of Gresham PE, confesses that in retrospect he found “the print sector very difficult “ and cites a number of “brave attempts” to make money in it. “GEON is turning around and is now heading in the right direction. Or at least it was when I was last involved in November,” he said.

He would not be drawn on whether he considered the investment a good move or whether he would do it again with the benefit of hindsight. Last year GEON posted a $180 million loss while McKelvie was still on the board of directors. Gresham was also called upon to top up its investment.

The history and future of the consolidated PE-backed printing companies continues to vex the pundits. Best estimates are that between them (GEON and Blue Star) have over 25% of commercial printing in Australia and New Zealand.
Their reliance on scale and geographic spread to deliver a competitive advantage is proving difficult to execute.

Both major groups carry a mountain of PE debt. Neither group publishes annual figures so it’s difficult to gain a clear picture of their progress.
But on the question of whether they will ever repay the PE-funds’ multi-million investment – as Roy McKelvie puts it, “the jury is still out.”