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Cartrack CEO sees growth, consolidation

Company lists on the JSE, concludes it’s ‘best year yet’.

Fleet Management, Vehicle Recovery and Telematics group Cartrack Holdings listed on the JSE’s Main Board on Friday, at an opening price of R9.50 a share.

Cartrack’s CEO and founder Isaias Calisto told Moneyweb he’s content with opening price. “I think the value is much higher, but the market will sort it out.” Cartrack retains 80% of the shareholding and will only consider releasing more than 20% if the price goes beyond R12 a share.

“Getting it here was perhaps the most difficult part. Now we’re going to focus on the growth of the business.“

This followed a capital raising of R510 million which gave Cartrack a market value of R2.55 billion at listing – according to a statement released on Friday.

The company is the first to list in the business support sector this year, joining 15 existing companies.

Its listing comes at an opportune time, said Donna Oosthuyse, JSE Capital Markets Director. The JSE experienced its biggest trading day ever on Thursday, with a record value of R53.7 billion – 41% higher than its previous record.

She added that there had been 23 listings [on the Main Board] this year – something the JSE has not seen since 2007.

Growth prospects
Calisto said fleet management constitutes more than 50% of Cartrack’s business and he estimates that this will increase to 55% by February 2015. Its unit sales are pegged to reach about 435 000.

Cartrack is established in 18 countries across Africa, Asia and Europe. Coming off a larger base, its growth in South Africa is the slowest, but “still pretty good.

“Outside of SA, we’re seeing growth in all regions. We saw a lot of growth in Poland and some African countries [in particular] … growths like 50%, 70% a year, but off a low base.”

Calisto said 2014 has been the company’s best year yet for growth in both percentage and rand terms. “Obviously with that growth there’s quite a lot of acquisition costs and because of the way we do our accountancy where we sink all those acquisition costs in the year we actually only getting about 20% growth on profit after tax…. We’re still growing in the region of 33% in revenue this year.”


The CEO admitted Cartrack has many competitors, but says the question to ask is whether or not they’re investing the most in technology and developing services.

Significant seed capital was advanced toward these companies up until two or three years ago, but that has now dwindled.

“There’s very little seed capital being thrown…. What we’re finding now is the money that you need to be able to grow this business is much more than three, five or ten years ago. So there’s not many new entrants coming into the market and the guys that haven’t got the number of subscribers are fading away.”

As such, is there scope for consolidation? “There’s definitely scope for consolidation. I think some of the other guys, although they’ve got size, could have lost focus and that presents an opportunity where we can get value for them and for the existing shareholders. I think there’ll be market consolidation in the next three years,” said Calisto.


“Our outlook for next year is very, very positive. We’re fortunate in that it doesn’t matter if the economy is doing well – there’s still demand for our services and products. Obviously positive economies do contribute more positively, but even if there isn’t market growth, it’s still positive for us,” he added.

The share was flat at the end of trade on Friday, after reaching a high of R9.75.

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