Growth Fund completes exit from Australian motorcycle dealership
The Growth Fund has sold the remainder of its stake in Australian motorcycle dealership operator MotorCycle Holdings – which it took public last year – for approximately A$18.5 million ($14.5 million).
The private equity firm, previously known as Archer Growth, sold 3.9 million shares in MotorCycle Holdings for around A$4.75 apiece, according to a filing. The stock closed up 1.46% on October 18 at A$4.85, which represents a more than 140% premium to the IPO price.
The Growth Fund reduced its stake from 60% to 10% when MotorCycle Holdings listed in April 2016, selling 13.1 million shares for A$26.2 million. It received an additional A$13 million through the redemption of preference shares and repayment of shareholder loans. The overall offering was worth A$46.3 million. The company’s founder and CEO retained a sizeable interest in the business.
MotorCycle Holdings was acquired by The Growth Fund in June 2011 with a view to supporting organic and M&A expansion. The company increased its number of locations from 14 to 24 and now operates 34 franchises for the likes of BMW, Harley-Davidson, Honda, Suzuki, and Yamaha.
There are estimated to be more than 700 motorcycle dealerships across Australia, but only three companies own more than four dealerships. MotorCycle Holdings claims to account for approximately 7% of new motorcycle sales nationwide. It sold 9.089 new vehicles in the 2017 financial year, up from 7,538 for the previous 12 months. Used vehicle sales rose from 6,393 to 7,221.
Further revenue comes from sales of used motorcycles, accessories and parts, finance, insurance, and warranty products as well as service and repairs. The company also has a rider training school and a business that performs smash repair work for insurers.
Overall revenue reached A$253.3 million in 2017 compared to a pro forma figure of A$209.3 million for the previous year. Over the same period, EBITDA increased 14.4% to A$14.6 million and net profit rose 16.3% to A$9.3 million.
The Growth Fund raised two vehicles under the Archer Capital banner but now operates independently. It closed Fund III last year at A$450 million. The firm made a partial exit last month from Laser Clinics Australia when KKR acquired a majority stake in the business.
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