Peter Warren Automotive IPO hits ASX at high speed

After 63 years in business, one of Sydney’s best known car dealers has hit the ASX and floored it, delivering a huge windfall for its founding family.

Paul Warren is staying on as executive director. Picture: John Feder.

Prominent western Sydney car dealer family the Warrens have seen a $200m windfall after their 63-year-old auto business hit the ASX at top speed.

Peter Warren Automotive finished its first day on the stock exchange at a 19.31 per cent premium to shares sold under its initial public offer, valuing the car dealer group at approximately $576m.

Other shareholders to see a windfall include Queensland’s Frizelle family – whose Gold Coast-based Frizelle dealership was merged with Peter Warren in 2017 – with their 3.7 per cent stake valued around $21.3m.

The listing of the auto dealer comes amid a boom in new and used car sales helped by a booming economy while cashed-up consumers unable to travel overseas are looking to upgrade.

The family business hit the bourse at 12.30pm on Tuesday at $3.41 per share, well above its $2.90 issue price, before slowly lifting through the afternoon to close at $3.46 per share.

A $3.46 share price values the 35.1 per cent stake of its largest shareholder – the Warren family – at just over $202m.

After ringing the bell at the ASX in Sydney members of the family departed to a celebratory lunch.

Others to also see a share windfall include company CFO Bernard Friend, company CEO Mark Weaver and Corporate Travel Management boss Jamie Pherous, who has a small stake worth just under $600,000.

Private equity group Quadrant, which bought into the company 2016, sold down from 49 per cent to 9.4 per cent.

Around 20 per cent of staff also purchased shares.

Mr Weaver said the company would aim for growth by consolidating the automotive dealer sector.

“Peter Warren has a demonstrated history of growth via both greenfield and brownfield developments which positions us well to be a consolidator in the fragmented automotive sector,” he said.

“Our growth strategy is to continue to invest in new dealerships and to acquire strategic property sites.”

Peter Warren Automotive raised $260m under the IPO which was managed by Jarden Australia, Jefferies and Morgan Stanley Australia, valuing the company at $483m.

The price for the float was fixed at 15 times the company’s estimated net profit for 2021.

The dealership group has 70 franchise operations, with Peter Warren, Frizelle Sunshine Automotive, Sydney North Shore Automotive, Mercedes-Benz North Shore, Macarthur Automotive and Euro Collision all part of its chain.

The company was started in 1958 by Peter Warren, father of former CEO and chairman Paul Warren.

The younger Mr Warren has recently transitioned into an executive director role, replaced as CEO by former chief operating officer Mark Weaver and as chair by Nick Scali chairman John Ingram.

But Mr Warren has no plans to walk away from the company, telling The Australian in March that he planned to stay invested in the business “for a long time.”

“If your dad’s name is on the door, you want to make sure you are still in the house,” he said.

“You have to be supportive of your family name. My dad would be horrified if we walked away from the family name.”

In its half yearly result for the current financial year the company booked a profit of more than $21m on $745.9m on revenue as a rush of consumer demand hit the long-dormant Australian new car market.

The company also received $13.85m in JobKeeper wage subsidy support during the period, but elected to repay $13.3m to the government.

Peter Warren Automotive’s IPO has boosted the number of ASX traded car dealership groups to three, the others being Eagers Automotive and Autosports.

Eagers Automotive has a market capitalisation of $4.1bn while Autosports is valued $498.5m.