Modern Star

Overview

Modern Star is a digitally enabled e-commerce provider of educational resources to Australian early childhood centres and schools with a 60+ year heritage. The business is the outright market leader and a one-stop shop offering 30,000+ SKUs across Australia and New Zealand.

When Navis invested in Modern Star in 2014, its objective was to leverage Modern Star’s platform to reach every K-12 educational institution in Australia, grow its share of wallet, and double its market share. This was accomplished through hands-on support on organic growth initiatives and strategic acquisitions.

Navis sold Modern Star to Pacific Equity Partners in late 2020. The transaction valued Modern Star at an Enterprise Value of over A$600 million, with key senior management reinvesting. Navis retained its interest in the China division (“Wisdom”) as part of the transaction.

Investment Rationale

  • Education resources market leader: strong positions across all key subject verticals, with 60 years of brand history in the Australian market
  • Defensive growth industry: education funding per student is increasing, and educational resources are a small but essential portion of school spending
  • Opportunity to grow market share: via both organic and M&A initiatives
  • Scalable platform: Modern Star’s investment in a market-leading online platform enables margin expansion with growth
  • Asia expansion: Modern Star successfully grew into China via the acquisition of Wisdom

KEY FACTS

SECTOR
Education

HEADQUARTERS
Sydney

INVESTMENT DATE
October 2014

NAVIS OWNERSHIP
86%

Navis Value Impact

  • Digital Transition: Navis continued the transition from a traditional B2B supplier to a digitally enabled e-commerce provider of education products. As a result, Modern Star delivered annual organic growth of 5% above the market.
  • Operational Value-Add: Navis assisted with multiple operational initiatives, including growing the primary school segment, expanding OEM product ranges, driving supply chain efficiencies, improving sales-force effectiveness, and strengthening human capital
  • Strategic Acquisitions: Navis drove nine strategic bolt-on acquisitions, which step-changed market share. Navis’s Portfolio Operations supported acquisition integration.
  • ESG: Navis step-changed Modern Star’s ESG efforts by supporting sustainable sourcing and implementing supplier audits to reduce modern slavery risk.

Looking ahead

“When we invested in Modern Star, our objective was to leverage its platform to reach almost every K-12 educational institution in Australia, grow share of wallet, and double its market share, which we have successfully accomplished. The business also performed strongly during COVID-19, demonstrating the resilience and diversification of the B2B platform. We wish the management team all the best as Modern Star embarks on the next phase of its growth journey with PEP.”

Philip Latham, Navis Senior Partner in 2020