SG Fleet opens books to Pacific Equity Partners after $1.2bn bid

SG Fleet has opened its books to Pacific Equity Partners following a $1.2bn takeover bid for the fleet management and novated leasing provider.

SG Fleet has opened its books to private equity firm Pacific Equity Partners.

SG Fleet has opened its books to Pacific Equity Partners following a $1.2bn takeover bid for the fleet management and novated leasing provider.

ASX-listed SG Fleet told investors on Monday the Sydney private equity firm had made a $3.50-a-share non-binding offer for the company, representing a 31 per cent premium on its closing price of $2.67 on Friday.

Shares surged on the news, with SG Fleet closing 18.4 per cent higher on Monday at $3.16.

South African logistics company Super Group, which has been looking to offload its 53 per cent stake in SG Fleet, backed further talks with PEP, SG Fleet said.

“The board of SG Fleet, together with its advisers, and in consultation with its largest shareholder, has determined that it is in the interests of all SG Fleet shareholders to engage with PEP on the indicative proposal,” the company said in a statement to the ASX.

SG Fleet has extended a period of exclusive due diligence to PEP until November 29 in the hope of securing a firm offer and negotiating a scheme implementation deed.

The company, which listed on the ASX in 2014, provides fleet management, vehicle leasing and salary packaging services to customers across Australia, New Zealand and the UK, and has more than 277,000 vehicles under management.

DataRoom reported in July that Super Group had been looking for an exit from its majority position, but when SG Fleet reported its results in August investors were told that Super Group had called off the sale process for its stake after being unable to find a buyer.

Part of the challenge has been the inflated valuations of companies such as SG Fleet and fellow ASX-listed players FleetPartners and McMillan Shakespeare, which have benefited from a boom in novated leasing for electric vehicles driven by government incentives.

SG Fleet reported a 6.7 per cent increase in net profit to $89.7m in the year to June, on an 11.4 per cent increase in net revenue to $390.1m, with low and zero-emission vehicles making up more than half of its novated leasing orders.

The company expects underlying net profit to land in the range of $88m to $95m for 2024-25.

After hitting its 2024 peak of $3.30 in August, the company’s shares have softened in recent months due to the hype around electric vehicles somewhat abating, and its exposure to sluggish economies in NZ and the UK.

A consolidation of Australia’s fragmented fleet management industry has long been on the cards, and SG Fleet previously had an $805m bid for FleetPartners (then known as Eclipx) rejected by its listed rival.

SG Fleet later paid $387m to acquire Dutch group LeasePlan’s Australia and NZ business in 2021.

At the company’s annual meeting last month, SG Fleet chief executive Robbie Blau said it had already unlocked $5m in annual synergies following the LeasePlan acquisition, and expected a further $20m to be realised by 2025-26.

He told investors new vehicle supply across Australia, NZ and the UK continued to improve, “albeit with some remaining shortages in certain vehicle types”.

“This has allowed us to maintain elevated delivery levels,” he said.

“Despite this, the order pipeline in the corporate channel remains elevated, at about 3.2 times what we would consider normal levels.

“In novated, we have progressed a bit further, and we are at about 2.5 times normal levels. In other words, the catch-up will continue for some time.”

SG Fleet has engaged BofA Securities as its financial adviser and Gilbert + Tobin as its legal adviser.

Originally published as SG Fleet opens books to Pacific Equity Partners after $1.2bn bid