The Growth Fund set for part-exit in Motorcycle Holdings IPO
Archer Growth – which is now known as The Growth Fund – is on course to make a partial exit from MotorCycle Holdings, with the Australian motorcycle dealership operator targeting a A$46.3 million ($36 million) IPO.
The company is offering 23.1 million shares at A$2.00 apiece, which would give it an enterprise value of A$86.9 million, according to a prospectus. The Growth Fund, which currently holds a 61% stake in the business, will sell 13.1 million shares in the offering for A$26.2 million. It will receive a further A$13 million through the redemption of preference shares and repayment of shareholder loans.
The Growth Fund will retain a 10% interest, or 3.9 million shares, worth A$7.8 million based on the IPO price. David Ahmet, the founder and CEO of MotorCycle Holdings, will not sell any shares in the offering and his stake will be diluted to 22% from 30%. Other management shareholders will go from 9% to 7%.
The Growth Fund invested in MotorCycle Holdings in June 2011 with a view to supporting organic and M&A expansion. Since the acquisition the company has 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. It is the largest motorcycle dealership in Australia, accounting for 6% of all new vehicle sales nationally.
MotorCycle Holdings' dealerships sell new and 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.
Pro forma revenue came to A$185.7 million in the 2015 financial year, up from A$174.7 million in 2014. EBITDA rose from A$7.5 million to A$7.8 million over the same period, while net profit increased from A$4.5 million to A$4.6 million. The company is projected to generate revenue of A$212.8 million in 2016, with EBITDA and net profit coming in at A$11.3 million and A$6.9 million, respectively.
The Growth Fund raised two vehicles under the Archer Capital banner but now operates independently. A final close on Fund III is expected imminently. The firm focuses on the lower middle market, acquiring businesses in Australia and New Zealand with enterprise values of up to A$200 million.
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