Jetcon aims for $95m in IPO
Pre-owned auto dealership Jetcon Cars Limited will seek to raise $95.6 million in its initial public offering this month.
The 22-year-old company founded by majority shareholder Andrew Jackson wants to offer the general public, employees and existing clients roughly 20 per cent ownership combined.
Jetcon, which is still in growth mode, wants to use the funds to pay down bank debt; build a showroom; expand its bonded warehouse; provide working capital support for the purchase of vehicles; and finance the cost of the IPO.
If successful, it will be the only auto trader to list.
The company will issue up to 44.5 million shares, bringing its total issued share capital to 194.5 million units. Shares are open to the general public at $2.25 each.
?The company believes that listing on the Junior Market of the JSE will raise its profile thereby allowing it to raise funds if required on more favourable terms for future expansion,? said chairman John Jackson. John and Andrew are brothers.
Jetcon earned total comprehensive income of $40.3 million on revenues of $523 million at year ending December 2015 or about four times the $10.5 million in comprehensive income earned a year earlier. Over the last five years revenues have more than tripled totalling $156 million in 2011; $378 million in 2012; $373 million in 2013; and $349 million in 2014 before growing to 2015 levels.
Jetcon describes the used car industry as highly fragmented and competitive but says it holds a defensible position in the market. It estimates that there are approximately 200 registered used car automotive dealerships, as well as unregistered private entities.
?Competition in the industry is increasingly affected by the use of internet-based marketing and other internet-based tools for both consumers and the dealers. Management estimates there were approximately 16,000 pre-owned vehicles and 5,000 new vehicles imported in calendar 2015. However, not all of these vehicles are in direct competition with the vehicles we carry, especially when the price range and financing options are taken into account,? Jetcon stated in its prospectus.
The company currently sells Mazda, Nissan, Subaru, Suzuki, Toyota, Honda and Daihatsu cars.
Over the long-term, Jetcon believes the demand for its cars and servicing will grow based on the government?s commitment to implement policies to generate economic growth, increase employment and keep interest rates low.
?To expand our vehicle unit sales we will need to continue delivering an unrivalled customer experience and hiring and developing the team members necessary to drive our success, while managing the risks posed by a competitive environment, ensuring a continued flow of vehicles for sale and continue to explore new sources of revenue,? said Jetcon.
?We expect that the successful completion of this share offering and the subsequent listing on the junior market will bring added exposure for the company and its brand and help to increase sales.?
The IPO opens March 14 and closes March 17.