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.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: NZ Wool Exports Jump To The Highest In More Than A Decade

New Zealand wool exports jumped to their highest level in more than a decade in June, aided by a lower currency and strong demand from China, the nation’s largest market. More>>

ALSO:

Surreal Estate: Home Values Rise At Fastest Rate In Seven Years

The latest monthly QV House Price Index shows that nationwide residential property values for July have increased 10.1% over the past year which is the fastest annual rate since 2007... The Auckland market has increased 18.8% year on year. More>>

ALSO:

New Employment Laws: Talley’s AFFCO Workers To Strike

The decision comes after the Talley’s owned company walked away from mediation last week and applied to end bargaining under the government’s new employment laws - the first such application since the law came into effect. More>>

ALSO:

Private Action: Employer Pleads Guilty Over Forestry Death

The CTU has always known that the death of forestry worker Charles Finlay was due to the poor health and safety practices of his employer... "The CTU, with the support of Charles’s family, needed to take this ground breaking private prosecution." More>>

ICT Innovation: Six NZ Finalists In World Summit Awards

The awards are a global showcase of 40 projects, across eight categories, with a special emphasis on those which show the benefits of information and communication technology for the development of communities. New Zealand has finalists in six of the eight categories. More>>

ALSO:

Final Frontier: Rocket Lab And NASA Sign Commercial Space Launch Agreement

Rocket Lab has signed a Commercial Space Launch Act Agreement with the National Aeronautics and Space Administration (NASA). The agreement enables Rocket Lab to use NASA resources - including personnel, facilities and equipment - for launch and reentry efforts. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news