Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

Smartkarma

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FleetPartners Group  / Equity Capital Markets

<p>Eclipx Group plans to raise US$200m through its IPO.&nbsp;While a pure look at the fundamental, doesn't warrant a participation in the IPO (i.e. the deal doesn't score well on our framework), however, we would consider subscribing to the IPO given:</p><ul><li>The company recently (in 2014) got in a new CEO and CFO, who were both previously working at FlexiGroup and have demonstrated a good track record there. This is not reflected in the company's historic financials, which have shown slow/degrowth over the past three years.</li><li>We are hearing that the book build is going strong with investors showing a lot of faith in the new management. If the management is able to steer a turnaround then the stock should hold up well given that the company can still tap into new segments and build upon its recent acquisitions as well.</li><li>The stock is being offered at 11x p/e, vs an average of 12.4x for peers, and offers a dividend yield of 4.8-5.6% vs. 4.5-5.5% for peers.</li><li>In terms of momentum the deal scores well on our framework, largely because previous deals in the sector &nbsp;and in the country have performed well.&nbsp;</li></ul><p>Risks:</p><ul><li>Given the sustained fall in PATMI over the past three years, combined with investors having the option to invest in the sector through its three other broadly similar listed peers, the stock is unlikely to warrant strong long only demand, in our view.</li><li>Recent similar sized IPO of its directly comparable peer - SG Fleet Group (SGF AU, listed in Mar-2014), promptly fell below IPO price, although now the stock is trading 27% above its IPO price.</li></ul>

Eclipx Group plans to raise US$200m through its IPO.&nbsp;While a pure look at the fundamental, doesn't warrant a participation in the IPO (i.e. the deal doesn't score well on our framework), however, we would consider subscribing to the IPO given:The company recently (in 2014) got in a new CEO and CFO, who were both previously working at FlexiGroup and have demonstrated a good track record there. This is not reflected in the company's historic financials, which have shown slow/degrowth over the past three years.We are hearing that the book build is going strong with investors showing a lot of faith in the new management. If the management is able to steer a turnaround then the stock should hold up well given that the company can still tap into new segments and build upon its recent acquisitions as well.The stock is being offered at 11x p/e, vs an average of 12.4x for peers, and offers a dividend yield of 4.8-5.6% vs. 4.5-5.5% for peers.In terms of momentum the deal scores well on our framework, largely because previous deals in the sector &nbsp;and in the country have performed well.&nbsp;Risks:Given the sustained fall in PATMI over the past three years, combined with investors having the option to invest in the sector through its three other broadly similar listed peers, the stock is unlikely to warrant strong long only demand, in our view.Recent similar sized IPO of its directly comparable peer - SG Fleet Group (SGF AU, listed in Mar-2014), promptly fell below IPO price, although now the stock is trading 27% above its IPO price.

Eclipx Group - All hope on new management driving a turnaround

Australia

FleetPartners Group Limited provides vehicle fleet leasing, fleet management, and diversified financial services. The Company offers consumers and businesses access to funding solutions including fleet leasing, vehicle sales, commercial equipment finance, and consumer motor vehicle finance. FleetPartners Group serves customers in Australia and New Zealand.

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FleetPartners Group (FPR AU)

Eclipx Group - All hope on new management driving a turnaround

Eclipx Group plans to raise US$200m through its IPO. While a pure look at the fundamental, doesn't warrant a participation in the IPO (i.e. the...

Sumeet Singh

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