SG Fleet (ASX:SGF) provides motor vehicle fleet management and salary packaging services in operations across Australia, New Zealand and the United Kingdom. It began operating over 30 years ago and has grown both organically and through acquisition. The ownership structure has also undergone a number of changes culminating in an ASX listing in March 2014. South African conglomerate Super Group retains a controlling interest via wholly owned investment firm Bluefin Investments.
Source: https://supergroup.co.za/our-s...
Since listing, the business has continued to grow. There have been two significant acquisitions. In 2016 they acquired another novated leasing business, nlc and then in September 2021, they acquired LeasePlan ANZ.
LeasePlan ANZ was acquired for total compensation of $387 million. The compensation consisted of both scrip and cash. $114 million was in the form of SGF stock. The cash component was funded by an $86m capital raise, $175m in debt and $12m in cash.
LeasePlan’s CEO and Chairman, Tex Gunning, joined SG Fleet’s board. LeasePlan ANZ’s previous parent company LeasePlan Corporation NV are now the second largest shareholder in the company with 13% of the issued stock.
With over 75% of SG Fleet’s shares on issue held by the top holders the amount of liquidity available is reduced.
The pandemic struck car leasing businesses particularly hard. For a period of time, people largely stopped leasing new vehicles. Lockdowns meant consumers were unable to shop for new vehicles and many vehicle manufacturers stopped or reduced production. SG Fleet are now getting back on track. If forecast EPS for 2023 is realised, it would see profitability return to around the same levels as 2019.
Sourcing enough supply of new vehicles has been very difficult over the last few years, especially the high volume popular makes. Delivery timeframes were pushed way out as a global microchip shortage and logistics supply stunted growth. They are now stabilising but yet to start improving markedly.
The lack of new vehicle supply has led to used vehicle prices reaching record levels. The drop in new car production at the start of the pandemic has now created a shortage of three year old vehicles adding further upward pressure to used car values. Used vehicles prices remain very elevated although they have come down from the peak…
