James Packer’s investment in online retail group Catch of the Day represents the second part of a push to become one of the largest angel investors in Australia’s online retailing space.
Packer, along with New York investment fund Tiger Capital Management, Seek co-founder Andrew Bassat and Glenn Poswell founder of Gannet Capital, has invested $80 million in Catch of the Day and its group buying subsidiary Scoopon, valuing the group at $200 million.
The deal comes a few weeks after Packer’s private equity fund, Ellerston Capital, put a reported $10 million into Australia’s other big independent online retailer, Deals Direct.
So in the space of about a month, Packer has made an impressive bet on the future of online retail in this country.
He clearly sees a lot of growth in this sector and his money will help Catch of the Day and Deals Direct grow their market share and cement their position in this market.
We should expect to see both companies examine merger and acquisition opportunities (Deals Direct has already done this), open new websites and expand overseas.
There is also a chance that Catch of the Day and Deals Direct could become takeover targets themselves, with media companies and traditional online retailers likely to be keeping a watching brief on these emerging players.
Either way, Packer will be hoping for a good return.
And why not? His track record in tech investments is actually pretty impressive.
While Packer may never live down the collapse of One.Tel during the dotcom crash, you could argue this business was more a telecommunications company than a pure tech company.
Put this aside, and there are some impressive wins.
Take the Packer family’s investment in Seek, for example. Publishing & Broadcasting Limited bought a 25% stake in the company in August 2003 for $33 million, selling out six years later for $440 million.
Then there is Carsales.com, in which PBL invested about $100 million across 2005 and 2006. Nine Entertainment Company (the renamed PBL) sold this stake for $562 million.
While both deals were made under the PBL banner, they were both seen as James Packer’s babies.
He also had good success with PC Tools, which was sold by founder Simon Clausen to security giant Symantec in 2008 for $300 million.
Packer made a reported profit of $40 million on his $20 million investment.
The boys behind Catch of the Day and Deals Direct will be hoping Packer’s got it right once again.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
