Babylon Pump & Power has announced the $2.8 million sale of its non-core Ausblast business to Sandgroper Group Holdings, marking a decisive step in the company’s strategic simplification. The all-cash transaction, expected to complete on 21 January 2026, will reduce net debt by approximately $1.5 million whilst freeing $1.3 million for working capital and growth initiatives. The sale implies a 5.6x annualised EBITDA multiple based on Ausblast’s H1 FY26 performance, which generated revenue of approximately $1.1 million and EBITDA of approximately $0.25 million.
Babylon Sells Ausblast for $2.8 Million in Strategic Pivot to Water Management
Babylon Pump & Power (ASX: BPP) has entered into a binding agreement to divest Pilbara Trucks Pty Ltd, trading as Ausblast, to Sandgroper Group Holdings Pty Ltd as part of a portfolio rationalisation strategy aimed at concentrating resources on its higher-margin rental and water management platform. The transaction represents a clean exit from industrial services, with total consideration of $2.8 million payable in cash upon completion on 21 January 2026, subject to standard conditions.
The sale follows a strategic review designed to simplify the Group’s operations and redeploy capital into activities offering stronger scalability and margin potential. In the six months to 31 December 2025, Ausblast contributed revenue of approximately $1.1 million and EBITDA of approximately $0.25 million, implying a 5.6x annualised EBITDA multiple. This valuation suggests Babylon has secured reasonable terms for a business it considers non-core to its future direction.
The all-cash structure eliminates earn-out contingencies and accelerates balance sheet benefits, allowing management to immediately redirect resources toward the company’s enlarged rental platform. This platform has expanded through recent acquisitions including Matrix Hydro Services and Blue Hire, positioning Babylon as a specialist water management and rental operator to the resources sector.
Management Commentary
“The sale of Ausblast is a logical step as we continue to refine and strengthen Babylon’s strategic focus. This transaction allows us to simplify the business, strengthen the balance sheet and redeploy capital from a low growth segment into our core rental and water management activities, where we see the strongest long-term returns,” said Michael Shelby, Managing Director.
The transaction reduces operational complexity whilst maintaining financial flexibility for growth initiatives, with proceeds split between debt reduction and working capital allocation.
Why Is Babylon Selling Ausblast?
Acquired in March 2021, Ausblast has operated as a specialist industrial services business providing vacuum truck and high-pressure water blasting services to the resources sector. Whilst the business has performed reliably since acquisition, it is non-core to Babylon’s current strategy, which is now firmly centred on specialist water management, rental and technical services to the resources sector.
The divestment forms part of a broader portfolio simplification exercise aimed at exiting low-growth industrial services operations to concentrate fully on the integrated water management and rental platform. This strategic pivot reflects management’s assessment that rental services offer superior scalability and margin characteristics compared to project-based industrial services.
Key strategic benefits of the transaction include:
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Strategic Simplification: Exiting a low-growth industrial services operation allows management to concentrate resources on the rental and water management platform, improving strategic clarity and simplifying the investment proposition for shareholders.
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Balance Sheet Strengthening: Proceeds reduce net debt by approximately $1.5 million whilst providing additional liquidity for rental fleet expansion and working capital requirements.
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Capital Reallocation to Growth: The sale releases capital for reinvestment into Babylon’s expanding rental platform, which management views as offering stronger long-term returns than industrial services.
The transaction positions (ASX: BPP) as a pure-play specialist in water management and rental services to the resources sector, potentially enhancing valuation multiples by removing operational complexity. Importantly, whilst the transaction does not materially reduce corporate overheads, it reduces management complexity and execution risk.
What Ausblast Contributed to the Group
Ausblast provided vacuum truck and high-pressure water blasting services primarily to resources sector clients, operating as a specialist industrial cleaning provider. The business generated steady cash flows since acquisition but offered limited growth trajectory compared to Babylon’s rental operations.
Divesting a performing asset rather than a distressed operation demonstrates disciplined capital allocation, with management prioritising portfolio quality and strategic coherence over revenue diversification. The $2.8 million sale price at 5.6x annualised EBITDA validates the asset’s operational performance whilst allowing Babylon to exit at a reasonable multiple.
How Will Babylon Use Ausblast Proceeds?
The $2.8 million cash consideration will be allocated across two priorities: debt reduction and working capital for rental platform expansion. Approximately $1.5 million will be applied to reduce Group debt, lowering leverage and strengthening the balance sheet.
The remaining $1.3 million will support working capital requirements and organic growth initiatives within the rental segment, particularly fleet expansion following the Matrix Hydro Services and Blue Hire acquisitions.
| Use of Funds | Amount ($m) |
|---|---|
| Debt Reduction | $1.5 |
| Working Capital/Growth | $1.3 |
| Total Proceeds | $2.8 |
The transaction will result in Babylon’s invoice finance facility with NAB being reduced to $2.2 million, with the master equipment finance facility reduced by approximately $1.0 million. This simplified debt structure reduces financing complexity whilst maintaining adequate liquidity for operational requirements and rental fleet expansion.
The dual allocation strategy balances immediate balance sheet de-risking with preserving growth capacity in higher-return rental operations. By reducing debt servicing costs whilst funding rental fleet expansion, management aims to accelerate the platform’s contribution to Group earnings.
What Does the Ausblast Sale Mean for BPP Shareholders?
The divestment delivers three principal benefits for shareholders: strategic clarity, balance sheet strengthening, and capital redeployment to higher-growth activities. By exiting industrial services, Babylon becomes a pure-play water management and rental specialist, simplifying the investment thesis and potentially commanding higher valuation multiples from investors seeking exposure to rental platforms serving the resources sector.
The $1.5 million net debt reduction strengthens the balance sheet without compromising growth capacity, with the remaining $1.3 million directed toward rental fleet expansion. This allocation maintains financial flexibility whilst positioning the company to capture increased demand for specialist water management equipment and services.
Strategic benefits for shareholders include:
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Simplified Business Model: A concentrated focus on rental and water management services enhances strategic clarity, making the company easier for investors to evaluate and compare against peers in the rental services sector.
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Strengthened Balance Sheet: Debt reduction lowers leverage and financing costs whilst maintaining liquidity for growth initiatives, reducing financial risk without sacrificing expansion optionality.
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Capital Redeployed to Higher-Growth Segment: Proceeds fund rental platform expansion, which management identifies as offering stronger scalability and margin potential than the divested industrial services operation.
The transaction reduces management distraction and execution risk by eliminating a non-core operation, allowing greater focus on integrating recent acquisitions and expanding the rental fleet. This operational simplification may accelerate earnings growth from the core platform.
Understanding Babylon’s Rental and Water Management Platform
Babylon’s rental and water management platform provides specialist high-pressure pumping, dewatering and project water management services to resources sector clients. Rental operations offer more attractive economics than project-based services due to recurring revenue characteristics, higher asset utilisation rates and superior margin profiles.
Recent acquisitions of Matrix Hydro Services and Blue Hire have expanded the rental fleet and service capabilities, positioning the platform as a scalable growth engine. The resources sector’s ongoing demand for specialist water management equipment, particularly in remote and offshore locations, provides a supportive demand backdrop for rental fleet expansion.
The platform’s capital efficiency stems from its ability to redeploy rental assets across multiple contracts, generating recurring income streams whilst maintaining flexibility to adjust fleet composition based on market conditions. This contrasts with project-based services like Ausblast, which typically involve lower asset reuse and more variable revenue patterns.
What’s Next for Babylon After Ausblast?
Following completion on 21 January 2026, management will concentrate on integrating Matrix Hydro Services and Blue Hire into the enlarged rental platform. The $1.3 million allocated to working capital and growth will support rental fleet expansion, targeting specialist water management equipment to meet resources sector demand.
The simplified business structure allows management bandwidth to focus exclusively on higher-return rental activities, potentially accelerating platform earnings growth. The transaction creates optionality for further rental fleet investment should attractive acquisition or organic growth opportunities emerge in the water management segment.
With the divestment complete, Babylon positions itself as a specialist provider of rental and water management services, targeting recurring revenue streams and improved margin profiles compared to its previous diversified operations structure.
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