Pacific Equity Partners’ $1.2bn deal to buy SG Fleet is increasingly being viewed as a precursor to a purchase of MotorOne.
The recent buyout of the fleet leasing provider has observers betting that PEP, a Sydney-based private equity firm, will look on a deal to buy MotorOne favourably, given the strong synergies from owning the two businesses.
DataRoom earlier reported that PEP was a contender to buy MotorOne from Quadrant Private Equity, but was cautious on the price.
MotorOne has been up for sale through Macquarie Capital and Miles Advisory, with an asking price understood to be around $1bn.
DataRoom understands MotorOne’s annual earnings before interest, tax, depreciation and amortisation are about $75m.
It generates income from three main business units: crash repairs, subscriptions for minor repairs such as dents, and care services for added extras on cars for dealerships.
SG Fleet is one of its largest customers and can sell MotorOne’s products as an add-on service to its customers.
MotorOne describes itself as a leading business-to-business distributor of aftermarket products and services to dealerships. It is in a strong position in Australia after growing market share and expanding into new channels.
Quadrant bought MotorOne from private equity firm Navis Capital for $300m in 2016 when it was known as WorldMark, and key members of management retained equity in the business.
Quadrant moved to sell MotorOne in 2020.
PEP showed interest the last time it was for sale.
The pitch in the past for MotorOne has been its distribution network, with high barriers to entry, consistent earnings and a defensive nature in a growing sector.
IBISWorld expects the number of motor vehicles to grow steadily, in line with population growth, and higher disposable incomes will contribute to greater consumer demand for vehicle parts.
It comes as speculation mounts that PEP’s other investment – the recent $1bn play for Singapore Post’s Australia business – will probably be followed by an acquisition of Team Global Express from Allegro Funds.
PEP has been conducting exclusive due diligence on the Singapore Post business, which includes Freight Management Holdings, CouriersPlease, EFM Logistics and Border Express. It generates about $120m of EBITDA.
The largest part of the business is Freight Management, which is described as a diversified logistics holding company with fourth-party logistics and warehousing, transportation and technology divisions.
Team Global Express, run by Christine Holgate, has been for sale through UBS. It was purchased by Allegro for $15.5m as a distressed asset and recapitalised with $500m of debt.
According to its last accounts, it is losing money, with weak market conditions and high staff and fuel costs weighing on its bottom line.
TGE provides express parcel, freight delivery and domestic forwarding services in Australia, and transport and contract logistics services in New Zealand.
PEP’s move on SG Fleet and Singapore Post’s assets comes after it entered the race to buy Waste Services Group from Livingbridge, which is now set to be sold to The Carlyle Group for $1.2bn.
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