Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Cashed-up ERoad would look at Australian, US acquisitions

Cashed-up ERoad would look at Australian, US acquisitions

By Suze Metherell

July 18 (BusinessDesk) - ERoad, which provides electronic fleet tracking and road user pays management services, would look at acquisitions in Australia and the US to boost its market share once it completes an initial public offer of up to $49.5 million next month.

The Auckland-based company wants to raise $40 million in new capital to spend on expanding its US operations and Australian base. Of that, $3 million will go to repay bank debt and the rest to drive ERoad's growth aspirations. That includes potential acquisitions to accelerate that expansion, chief executive Steven Newman told BusinessDesk.

"We have looked at a few businesses with the purpose of looking at those acquisitions is to increase market share in existing markets or in order to get more relevance in new markets," Newman said. "An additional way to grow faster is to look at stranded fleet tracking companies with legacy technology that have a high client base, which are heavy transport, our primary focus in terms of that space based on what we know is Australia and the north west (United) States."

The company launched commercial services in Oregon, US in April on the invitation of the state's transport office, and is the only provider of electronic weight mileage in North America, Newman said. The US state is looking to introduce light vehicle mileage tax in a shift away from fuel tax used to fund roads and highways, and was the first in the world to develop a road user charge tax, or vehicle miles traveled tax, which New Zealand has adopted for heavy vehicles.

"In terms of why Oregon, it's because they actually asked us," Newman said. "They said if we were prepared to make an investment then they would help us get the product approved so they could rely on it."

Founded in 2009, ERoad was the first company to provide a nationwide GPS-based road user charge system. The company has recorded rapid year-on-year sales growth, and first turned a profit of $2.9 million in the year ended March 31, 2014 on sales of $10 million. It forecasts revenue to rise to $19 million in the 2015 year and to $34 million the following year, according to the prospectus. Eroad expects to report a loss of $1 million in 2015 due to listing costs of $2 million, before returning to profit of $5.5 million in 2016. ERoad is also predicting a drop in its retention rate, from 99.3 percent to 96.5 percent over the next two years.

The company doesn't intend to pay dividends in the near term and will be reinvesting funds to fuel market growth.

"We would anticipate that we would continue to grow quickly past the projected information period of March 2016, as of course to the extent we run out of opportunities and things to invest in, then the only responsible thing is to start paying dividends, but I don't anticipate that based on our forward vision for the business," Newman said.

ERoad will sell between 13 million and 15.7 million shares at an indicative price range of $3 to $3.80 per share, with existing shareholders selling between 2.4 million and 2.5 million shares and keeping about three-quarters of the business, according to its prospectus documents. The indicative price range would value the company at between $180 million and $228 million.

The final price is expected to be announced on July 29, with a listing on Aug. 15. The offer opens on July 30 with a preference pool closing on Aug. 6 and the broker firm offer closing on Aug. 12. The IPO won't have a public pool.

First NZ Capital is the sold lead manager of the offer and Deutsche Craigs is the co-manager.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Oceans: NOAA Declares Third Ever Global Coral Bleaching Event

As record ocean temperatures cause widespread coral bleaching across Hawaii, NOAA scientists confirm the same stressful conditions are expanding to the Caribbean and may last into the new year, prompting the declaration of the third global coral bleaching event ever on record. More>>

Scoop Business: A Decade Of Government Pre-Seed Investment

More publicly-funded science is being commercialised after a decade of government ‘pre-see’d investment, according to an independent review. More>>


Solid Energy: Plan To Shut Unprofitable Huntly East Mine

Solid Energy, the state-owned coal miner in voluntary administration, plans to shut down its unprofitable Huntly East mine and lay off 65 staff after deciding the site stands "no chance whatsoever" of finding a buyer. More>>


E Tū: Merger Creates NZ's Biggest Private Sector Union

E tū has been created by the merger of the Engineering, Printing and Manufacturing Union and Service and Food Workers’ Union. It represents more than 50,000 working New Zealanders in industries as diverse as aviation, construction, journalism, food manufacturing, mining and cleaning. More>>


Internet: NZ Govt Lifts Target Speeds For Rural Broadband

The government has lifted its expectations on faster broadband speeds for rural New Zealand as it targets increased spending on research and development in the country's information and communications technology sector, which it sees as a key driver for export growth. More>>


Banks: Westpac Keeps Core Government Transactions Contract

The local arm of Westpac Banking Corp has kept its contract with the New Zealand government to provide core transactions, but will have to share peripheral services with its rivals. More>>


Science Investment Plan: Universities Welcome Statement

Universities New Zealand has welcomed the National Statement of Science Investment released by the Government today... this is a critical document as it sets out the Government’s ten-year strategic direction that will guide future investment in New Zealand’s science system. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news