Norwest currently invests in some of the world’s largest brands including Uber, Spotify and Calm, and a range of franchise businesses.
Poolwerx founder and CEO John O’Brien says the investment will bring additional expertise and opportunities to enable Poolwerx to grow bigger and faster in Australia, New Zealand and the US.
The head office will remain in Brisbane, with the current US head office remaining in Dallas. O’Brien will take on the more strategic role of executive director, focussing on growth and development while Nic Brill, who has been in the role of chief operating officer for three years, will become the new CEO. Andrew Kidd will continue to lead the US business.
Norwest is now a third partner in Poolwerx with O’Brien, who founded Poolwerx 30 years ago, and Terry Morris, who has been a partner for 22 years. Poolwerx has a board structure with external directors and an external chairman and Norwest will have representation on the board.
O’Brien says the primary motivation for bringing on a third partner was to grow the business.
“We’ve done some pretty amazing things but we’re only scratching the surface,” he says. Poolwerx has ambitious plans, but couldn’t borrow enough from banks or even third tier lenders to fully realise their next growth stage.
Going public was not considered a suitable option.
“I’m not a public sort of guy,” says O’Brien. “It can give you access to capital, but these days private equity can give the price/earnings ratio a run for its money – you don’t have the cost of compliance and you can be way more entrepreneurial. And I’ve always been entrepreneurial at heart.”
O’Brien comes from an entrepreneurial lineage, with his great uncle Bill O’Brien co-founding Breville.
He says that through the partnership, Poolwerx will also have access to Norwest’s wealth of experience across both franchise and non-franchise businesses, allowing the group to reach ambitious growth goals faster.
“Norwest are experts at this sort of investment and have currently invested in 200 companies. They have a whole panel of global experts in a range of specialities, and one of the things that swayed us to choose them is that we have access to these global experts at no charge.”
O’Brien says they have already tapped into Norwest’s human resources and technology resources.
“We’ve just finished our Australian business plan with a whole new level of global thinking that you just don’t get here in Australia,” he says.
Poolwerx is the first partner in Norwest’s 16th fund, the focus of which is franchising.
“Not just franchising,” says O’Brien. “Its specific focus is home service franchising. And Pool was number one on their target list. They love that unlike some other home services, a pool can’t be ignored. It is a living beast, it consumes chemicals and equipment, it has to be looked after.”
Stew Campbell, partner at Norwest, says that Poolwerx is one of the few international franchise brands to crack the US market. He credits the company’s robust expansion processes, strong relationships with franchise partners and suppliers, and fiercely loyal customer base for the success.
“The company is uniquely positioned to capitalise on opportunities in the large and growing pool and spa market across products and services domestically and overseas,” Campbell says.
O’Brien says Poolwerx will first focus on the local market.
“We’re only about 25 per cent market share in Australia for the aftermarket and retail service sector,” he says. “We have mapped 400 areas, and we have stores in 140 of them. We want to put stores in every one of those territories.”
The other important market pegged for growth is the US, a huge market with 10,000 pool stores – 9000 of which are independents.
“Most of our growth has come from converting the independents to our brand. They’re similar in the US to Australia – they’ve been through two and a half years of covid and floods, and now they’ve got supply shortages and staff shortages to work through. Some of them are tired. We’re finding, moreso in America but here too, that they’re looking for help. Help to sell or for a shoulder to lean on.”
Leslie’s Pools Supplies has ten percent market share in the US, which is 1000 stores. Pinch A Penny has 250 stores, while Poolwerx currently has 40 stores across nine states.
“If we gained a ten per cent market share, we’d be very happy. And that would be less than half the market share we have in Australia.”
The third opportunity is Europe, where there are actually more pools than in North America. Poolwerx will take the same approach as the US: make local acquisitions and look to pick up local executive talent.
“France is the third largest market after America and Brazil, and France is also the third largest franchise market. After all, franchise is a French word! Our entry to Europe will be through France. But we won’t touch it until we’ve got America further along,” he says.
Equity investment and the pool market
O’Brien sees the growth of equity investment as a good thing for the market.
“We’ve seen private equity coming into our industry five years ago through investment in suppliers. Now in the last three years we’ve seen it in retail. Of the five big retail networks in the US, all the others had already been invested in by private equity.
“I see it as a good thing for our industry, both manufacturing and retail, to have this capital and expertise coming into our industry.
“It’s pretty exciting that a Brisbane-based Aussie company is not only cracking it in the US on our own steam, but we’ve got the interest of a very large private equity company to help us fulfill our dreams globally.”
InterFinancial Corporate Finance was lead advisor to Poolwerx and its shareholders on this transaction.
CAPTION: John O’Brien, executive director and founder of Poolwerx