Maui Capital

Who: BJ Ball Group
What: Buy-out partnership with the management team of BJ Ball, New Zealand’s largest paper distribution business, to effect a new merger and become the market leader in the Australasian paper business.  Maui owns a (71%) shareholding in BJ Ball Group.
When: October 2010 to September 2011
Website: www.bjball.com.au

By late 2010 management at BJ Ball had already shown they knew how to take the lead in the New Zealand paper sector. But by partnering with Maui the company has replicated similar success in Australia, and on a much larger scale.
Exciting business opportunities are very often associated with new and emerging sectors.  But they can be found also in older industries over-ripe for change.  In 2005 when Andrew Bull and a small group of fellow managers with deep experience in the paper business bought into New Zealand’s second largest paper merchant, BJ Ball, the company had languished with negligible growth for a decade.  Over five years their new team turned it around to establish it as a leader in several new sectors and quadruple revenues to $300m. They then set their sights on a longer-term goal of applying the same proven approach on a much larger scale in Australia.
 
To industry insiders, says Mr Bull, who is now a director of a much expanded trans-Tasman BJ Ball Group, the Australian opportunity had long been apparent.  Demand for paper products had remained consistent.   But just as had previously been the case in New Zealand, the market was fragmented, companies were losing money in a race for market share, and managements were stuck in old ways. “Boards needed changing, management needed changing, the way the whole sector worked needed changing,” he says.
But if the opportunity was clear the real test was in being able to take advantage of it.  Previous private equity and trade owners had made several attempts at this strategy and failed.  Maui took a majority stake in the company in October 2010.  And as they then worked on the Australian strategy together, Mr Bull says Maui also brought the ability and experience to execute the strategy for industry change.  It helped too that the new team were able to move quickly.  “We were in an old fashioned industry that had not realigned its cost base for twenty to thirty years and something needed to give. If it wasn’t us, it would have been someone else.”

They bought Focus Paper, Australia’s fourth largest paper merchant, in November 2010 and market leader CPI Paper two months later.  Relaunched under a merged new BJ Ball Group banner, the new company is now the largest distributor of paper products in Australia.  Craig Brown, the new CEO of the group , who was one of the original group to buy into BJ Ball, says even seasoned observers have been surprised by how successfully the merger has taken effect. “The future is exciting. We have got a terrific opportunity to make some important and profitable changes in our industry.  We hope we can do this quickly, but we also know how to be patient. If it takes a couple of years we can wait.”

So far patience has not been needed. In three months they have made $12 million in cost savings. State and national organisations have been rationalised.  The new group can supply a complete product offering ranging from specialist fancy stocks to the standard papers used by mass-market printers.  Customer response to a streamlined but wider offering has been positive.  Further growth is expected from acquisitions and new digital and packaging divisions.  Major competitors are already moving to  a  more sustainable business model.   Key assets will remain industry knowledge and strategic nous. The company’s board includes senior management, independent directors with substantial industry experience and Maui directors Paul Chrystall and Brent Lawgun. “The great thing is that we are all on the same page,” Mr Brown says.  “To some extent we had been building our market share slowly at BJ Ball.  Maui embraced the vision and said let’s go and knock on some doors.”  So they could open up a market ready for change.