Hire firm grows to take on big rivals
A Christchurch-based "weddings, parties, anything" hire specialist is extending its business model into the general hire market to take on larger established rivals.
The Party Warehouse started as an idea as a result of a 21st birthday party in the late 1990s and has grown to the extent the owners can contemplate a $2-$3 million expansion into the general hire sector.
Co-director Tim Aldridge said the company intended to be a direct competitor to firms like Hirepool, with its own branded subsidiary company Hire King.
Earlier this month Hirepool was tight-lipped on media reports the company is about to list on the sharemarket.
One report suggested Sydney-based private equity firm and owner of Hirepool, Next Capital, had hired advisers to list Hirepool.
Aldridge said he and business partners, Mark Bacon and Carla Webb, spent a relatively small amount buying a marquee and 50 chairs to start their hire company. Following the 21st they moved quickly into weddings and other events with the expansion mainly funded by cashflow.
They operated from his St Albans home for a few years before moving to Blenheim Road, where the business today employs about 30 staff including part timers.
Setting up Hire King as a 100 per cent-owned subsidiary would mean the group would take on extra staff. About $1m would be funded through bank debt, with the parent company also to provide funding.
Much of the capital would be used for general hire equipment including portable toilets, fencing, compacting and excavating machinery. Other items such as scissor lifts and storage containers would be added over time.
"We have ordered 14 containers of equipment so far we estimate $2 to $3 million worth of investment during the next 36 months," Aldridge said.
The firm had imported 70 toilets so far, and associated trucks and suction pumps, and also had a Bromley waste disposal site as part of that operation.
The group had recently supplied marquees to the City 2 Surf race and the group was also supplying 52 marquees and toilets to the Great Kiwi Beer Festival to be held on Saturday (March 29) the northern side of Hagley Park.
Party Warehouse has a 10 per cent stake in Team Event Ltd, the company that with general manager Callam Mitchell runs the beer festival.
Expansion into the general hire market was an opportunity to diversify the business and keep profits from the rebuild activity in the Christchurch, Aldridge said. Equipment including the toilets could be used on sites within the rebuild sites, which was placing heavy demand on hire resources.
The group had intended to set up Hire King late last year but plans were delayed by the big Canterbury storm in September and insurance issues following the earthquake and storm damage.
Party Warehouse had lost four large marquees together worth about $200,000 but with that loss covered by insurance. Since then insurance premiums had risen.
"We made the very difficult decision to self-insure for both earthquake and big weather storms due to 10-fold increases in premiums and excess, and other changes in our insurance conditions," Aldridge said.