South African logistics company Super Group is believed to be searching for an exit from its majority position in the $1.1bn Australian listed SG Fleet, a move which could kickstart a long-anticipated wave of industry consolidation.
Super Group, a provider of fleet leasing services in Australia, owns a 53 per cent stake in SG Fleet and has directors on the board.
It’s understood Super Group wants to sell its interest — currently valued at $572m — because it needs to bring the money back to South Africa.
SG Fleet’s share price has rallied in the past year from about $2.50 per share to almost $3.15.
The situation could be the catalyst for consolidation.
Merger talks have been held between SG Fleet and Fleet Partners in the past.
Earlier, McMillan Shakespeare was planning to buy Fleet Partners — then known as Eclipx — for about $912m but backed out after the target announced profit downgrades.
SG Fleet has worked with Bank of America, while McMillan Shakespeare previously worked with Deutsche Bank and Citi.
Also in the mix could be listed industry rival Fleet Partners, which has been considered a takeover target for years.
SG Fleet purchased rival LeasePlan in 2021 for $387m.
Also in 2021, TPG Capital, Potentia Capital and Aware Super made a $1.4bn bid for the Macquarie Capital-advised Smart Group, offering $10.35 per share, while BGH Capital, Quadrant and Pacific Equity Partners have also taken a look.
Market analysts say synergies existing in the industry are significant and consolidation makes increasing sense.
For the six months to December, SG Fleet’s net profit rose 8.5 per cent to $45.5m.
The company said strong order growth in corporate and novated leasing was fuelling the higher earnings and its order pipeline remained elevated.
Companies like SG Fleet were in favour last year as customers capitalised on government rebates for electric cars.
In its half-year results in 2023 SG Fleet said 7 per cent of all new vehicle registrations were electric vehicles, and novated leasing vehicles accounted for a significant proportion of private electric vehicle registrations.
The company said electric vehicles accounted for 37 per cent of quoting and orders in SG Fleet Novated channels and orders were up fivefold on the first half of 2023.
However, the Wall Street Journal reported at the start of the year Hertz was selling about a third of its global electric-vehicle fleet, a major reversal for the rental-car company, due to weak demand and high operating costs.
For the six months to December, Super Group reported R33.22bn ($2.76bn) in revenue and R4.24bn ($353m) in earnings before interest, tax, depreciation and amortisation.
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