JOHANNESBURG – Stolen vehicle recovery and fleet management firm, Cartrack will list up to 300 million shares on the JSE’s main board on December 11, the company announced late Friday.
Cartrack will make available via a private placement between 20% and 47% of its issued share capital (or between 60 000 and 141 000 shares) at an offer price of between R10 and R15 a share. As there is no minimum capital requirement to be realised by the offer, the offer price may be outside the offer price range, Cartrack said.
The offer opens on November 24 at 09h00 and closes on December 5 at 12h00.
Cartrack, present in 18 countries across Africa, Asia and Europe, will list in the JSE’s support services sector. The proceeds of the listing will be used to settle a buyback agreement between Cartrack and Onecell Holdings, a company owned by Cartrack founder and CEO, Zak Calisto. No proceeds will remain with Cartrack itself and through Onecell, Calisto will retain a controlling interest in Cartrack for two years after the listing.
Speaking to Moneyweb earlier this month, Calisto said the listing was not a capital raising exercise but primarily to lift the company’s profile and boost brand awareness. This would make it easier to engage with global vehicle manufacturers.
It has sights set on Asia in particular, where the number of vehicles and relatively underdeveloped telematics market offers opportunity. In the last 12 months it has built start-ups in Singapore, Malaysia and the Philippines, and is eyeing another six or seven countries in the region.
“With the size of the global vehicle fleet currently estimated at 1.1 billion vehicles and forecasted to grow to 2.3 billion vehicles by the year 2035, Cartrack is favourably positioned in a burgeoning industry,” the company said in a pre-listing statement. “In addition, current global commercial telematics subscriptions are expected to treble by 2019 relative to current levels,” it said.
Cartrack boasts around 386 000 units worldwide, which have helped drive average compound annual growth rates from 2012 to 2014 in revenue and net profit of 19% and 21%, respectively. It forecasts annual turnover of R848 million (2014: R637 million) and profit before tax of R285 million (2014: R240 million) for the year ending February 28 2015.
Highly cash generative, Cartrack intends to maintain a dividend payout ratio in excess of 70% after listing.
At the lower end of its offer price range, Cartrack trades at a price-to-earnings (PE) ratio of 17, which is roughly the same as rival Mix Telematics, according to Alpha Wealth fund manager, Keith McLachlan.
McLachlan said he was fairly neutral on the stock but was meeting with management in the next week.
Mix Telematics closed Friday at R3.53 a share. It reported adjusted profit for the year ended March 31 2014 of R123.9 million and had 479 000 subscribers at September 30.
“I find this part of the market fairly commoditised and quite overtraded, despite the growth prospects,” he said of the stolen vehicle recovery and fleet management sector, listing a string of competitors, including Tracker, Ctrack, Altech Netstar and Matrix.
The commoditised nature of the market would lead to serious margin pressure in the next five to ten years, as companies competed on price, McLachlan said.