Grays Australia pulls plug on ASX listing

Up for auction - a Holden HK Monaro.

The Grays Australia initial public offering has been shelved after investors were not prepared to pay a price that valued the business at more than $200 million only two years after Quadrant Private Equity bought it for $60m.

Grays said it had strong local and offshore investor engagement throughout the build up to the float, but it understood that investors needed to see a track record under Quadrant’s ownership.Quadrant purchased the online auction house from Eclipx in 2019 for $60m at the time business was understood to be weighing down its overall operations.

It has been making efforts to float the business through Jarden, UBS and Shaw and Partners, with analysts suggesting in pre-IPO research that its value was between $240m and $458m.

Attempts had been made to cornerstone the IPO and initially there was talk in the market that Quadrant was looking for a valuation of up to $500m for the business.

However, the understanding is that fund managers were sceptical that its value had increased so substantially since it was first bought by Quadrant.

As part of the IPO build-up, investors were told by Shaw and Partners analysts that total earnings before interest, tax, depreciation and amortisation were expected to increase 22 per cent from $23.6m in 2020 to $28.8m in 2021.

Earnings before interest, tax, depreciation and amortisation would increase 89.9 per cent from $13.9m in the 2020 financial year to $26.4m in the 2021 financial year.

The company was using Carsales.com, Domain Group, REA Group and Seek, which trade at between 23.7 and 26 times earnings, as comparables for its listing when it came to price.

Grays has 2.9 million registered users and about 138,000 active buyers, with 7900 active sellers.

It is most dominant in the industrial category and used vehicle sales and sold 94 per cent of all its assets last year through competitive auction, earning fees on commissions.

The company is seen as the second largest player in auto and industrial auctions behind Pickles.