Pact Group sells 50% of its reusable plastic crate business

Pact Group has signed a $160m deal for global infrastructure investment manager Morrison & Co to purchase a 50% stake in its Crate Pooling business. The Crate Pooling business, which is currently part of Pact’s Reuse division, manufactures and manages an asset pool of reusable plastic crates (RPCs) and folding produce bins used by retailers and suppliers in Australia and New Zealand in their fresh produce supply chains.

The new strategic partnership will operate as an independent entity, with Pact retaining a 50% interest and continuing to drive the next phase of growth. The investment by Morrison values the Crate Pooling business at an approximate enterprise value of AU$380 million.

Operating a network of wash and distribution facilities for RPCs used by retailers in Australia and New Zealand in their fresh produce supply chains, the business manufactures crates and bins in Australia and operates wash and distribution facilities that keeps them circulating in a loop across the supply chain.

Sanjay Dayal, Pact CEO and Managing Director, said the company has been seeing increased demand for its Crate Pooling offering, something which the partnership plans to accelerate with an expanded range of products and services.

The business has recently extended its crate pooling contract with Woolworths by 10 years and plans to scale up usage from 50 million to 80 million crates a year by 2025. It has also secured a long-term contract extension with ALDI Australia.

Mark Mudie, Partner at Morrison, said, “This is an attractive opportunity for our clients to gain exposure to the circular economy thematic, which aims to eliminate waste by keeping products and materials in use for as long as possible. We believe the circular economy can tackle some of our greatest social and environmental challenges, while unlocking economic value for our investors.”

RPCs are 100% recyclable and reusable, with each individual crate capable of replacing up to 140 units of single-use packaging.

Completion of the agreement is expected later this year, subject to the satisfaction of customary conditions and approvals.