DURBAN – THE BIDVEST group has said that it had entered into an agreement to buy Eqstra Fleet Management and Logistics (Eqstra) from enX for a reported R3.1 billion.
The group said the 100 percent purchase of Eqstra would include an equity value of R1.3bn. It said the acquisition remained subject to approval from enX shareholders, the Prudential Authority and the Competition Commission.
Bidvest said it planned to have the transaction concluded before the end of the year. It said the purchase was in line with its stated strategic intent to focus Bidvest Bank on its fleet management niche. “Bidvest is uniquely positioned to offer a cradle-to-grave fleet solution through Bidvest Bank and the automotive division,” Bidvest said.
“The acquisition will create funding, scale and operational efficiencies and result in a more balanced fleet exposure.” Bidvest is a leading South African services, trading and distribution company. Bidvest’s seven core divisions comprise services, freight, commercial products, office and print, financial services, automotive and electrical. Last year, the group spread its wings to the UK by acquiring 100 percent of the share capital and voting rights of Noonan Topco (UK), holding company of the Noonan Services Group for e175m (R2.75bn). In March, the group said that its interim trading profit lifted 6.3 percent to R3.3bn for the six months to the end of December. Bidvest said its revenue remained flat at R40bn, while headline earnings increased 10 percent Eqstra is a comprehensive fleet leasing and management solutions business. It had 12 300 vehicles under lease by the end of August 2018 and 120 000 fleet products under management. Its leasing assets totalled R2.6bn, with profit after tax of R143.9 million. Bidvest said the purchase price would be settled by Bidvest Bank and existing Eqstra debt will be refinanced by the bank’s available capital. It said it was positive that the transaction will be approved as enX majority shareholders have given irrevocable undertakings totalling 40 percent in favour of the transaction.
Peter Takaendesa, a portfolio manager at Mergence Investment Managers, said the Eqstra Fleet Management business had changed hands a number of times over the past decade. Takaendesa said the reason for its disposal remained the same, as Eqstra required significant access to funding.
He said Eqstra needed a parent with a big balance sheet to access that funding at attractive interest rates. “We believe Bidvest is well suited to grow this asset sustainably, given its strong financial position, operates a bank and is already exposed to automotive distribution. Although the value of the transaction is less than 5 percent of Bidvest and will contribute less than 3 percent of the group’s profits, the price paid by Bidvest looks relatively attractive compared to its own valuation, and the transaction will provide scale to the group’s financial services division,” Takaendesa said. Bidvest shares declined 0.51 percent on the JSE yesterday to close at R192.58.