Smartgroup heads for July market debut

Vehicle leasing and salary packaging company Smartgroup hopes to raise about $113 million ahead of its stock market debut in July.


The owner of Smartsalary and Smartleasing is issuing 70.5 million shares at $1.60 each as part of its initial public offering.

Smartgroup chief executive Deven Billimoria talked up the company’s credentials on Monday, saying it boasts a solid clientele base of government departments and corporations.

He says the company is the second largest of its kind in Australia and has lost just one client in the past 15 years.

“We have by far the highest client retention rate in the industry,” he told reporters.

Smartgroup’s main rival is McMillan Shakespeare, Australia’s largest provider of salary packaging and leasing services.

Its shares dived last year when the previous Labour government announced plans to abolish tax deductions for company car leasing.

CMC Markets chief market strategist Michael McCarthy said McMillan’s shares rallied after the election but have since experienced some weakness due to a slump in consumer sentiment after the May 13 federal budget.

“With an overall trend away from providing employee benefits, the Smartgroup is at least positioned in the one sector which is still retaining its employee benefits; that is the public sector,” he said.

Smartgroup’s IPO includes 47 million shares currently held by its Malaysian-based owner, Usaha Tegas, plus another 23.5 million new shares.

Usaha Tegas will retain a 30 per cent stake after the float, while Smartgroup’s management team will hold 3.2 per cent.

The company, which expects to have a $162.3 million market capitalisation when it debuts on the market on July 2, plans to use part of the proceeds raised from the float to reduce debt.

Its prospectus forecasts a rise in net profit to $6.4 million in 2014 from $3.8 million last year.

The business was established in 1999 and has 343 employees with major operations in Sydney and Melbourne.