Pacific Retail Group To Investigate Finance Group
17 December 2004
Pacific Retail Group To Investigate Finance Group Listing
NZX release: 17 December 2004 Pacific Retail Group Limited today announced an intention to investigate the public listing of its successful Finance Group next year.
PRG, which would retain a majority interest in the listed vehicle, is planning to scope a proposal for an initial public offering (IPO) of shares and an application to list on the New Zealand Exchange, in the first quarter of 2005. The listing would take place in the second quarter of the year.
The proposed IPO reflects the standing of the Finance Group as a substantial business in its own right, on track for a record $28-$30 million pre-tax profit for the year to 31 March 2005, and already with assets under management of more than $500 million.
The Finance Group is a specialist consumer finance company, the third largest in the New Zealand market*, and has built an excellent platform for future growth with more than 200,000 active customers.
Pacific Retail Group Acting Chief Executive Steve Smith says the listing is a natural step for such a strong performer. “The Finance Group already has significant market presence through its debenture, hire purchase and consumer loans business. Extending further into capital markets is a logical progression,” he says.
The Finance Group has a proven track record of success, delivering significant and consistent growth in the last five years, and PRG sees considerable further value growth potential.
“The listing will give the Finance Group greater autonomy and an even stronger market profile, as well as provide funding flexibility to keep pace with rapid projected growth and the resulting enhanced equity requirements,” Mr Smith says.
The proposed listing is also in line with PRG’s investment approach, allowing PRG to retain a majority shareholding while unlocking maximum value growth potential for the Finance Group.
“As an investment company in the consumer sector, PRG is focused on managing and adding value to a portfolio of consumer-oriented operating businesses. This listing will further deliver on our vision of providing maximum value for shareholders,” Mr Smith says.
The PRG Board anticipates that a Finance Group listing would include a preferential share entitlement for PRG shareholders and noteholders.
The Finance Group is the largest of PRG’s operating businesses and has grown its pre-tax profit from $5.7 million in the year to 31 March 2001, to $14.9 million in the March 2004 year, with a forecast $28-$30 million to March 2005. Assets under management have grown from $167.9 million in the March 2001 year to $516.8 million in the March 2004 year.
The Finance Group comprises three 100% subsidiaries – Pacific Retail Finance Limited, Pacific Retail Services Limited and Montreal Financial Services Limited. It offers a range of financial products, with issues of debenture stock used to fund personal loans and also provision of hire purchase contracts through well-known New Zealand retailers. Because the consumer lending portfolio is made up of relatively small parcels of debt, spread across a large customer base, it offers a spread of asset risk for the Finance Group and its debenture investors. The Finance Group also continues to benefit from an exclusive 10-year contract to provide consumer hire purchase funding for Noel Leeming Group*.
As part of the listing process, PRG plans to appoint independent directors to the Finance Group board, cementing a strong management structure.
Looking ahead, the Finance Group plans to continue to build its penetration into the personal loans market, launch new finance products in complimentary areas, ensure its business systems are streamlined to optimise further growth and strengthen its brand presence in the overall financial services field.
Going forward, PRG directors will continue to consider further initiatives to maximise shareholder value throughout the PRG portfolio. PRG intends to make presentations to the broking community from late January next year, further detailing its investment approach, portfolio companies and the above initiatives. We will also provide an additional update to PRG shareholders in the New Year.