US private equity firm TPG Capital is leading a $1.38bn bid for Australian salary packaging and fleet management services company Smartgroup.
TPG, alongside Australian PE investor Potentia and Aware Super, has secured a four-week exclusive look at Smartgroup’s books with a $10.35 a share indicative and non-binding offer.
The bid was pitched at a 31% premium to the last close and a 36% premium to the three-month VWAP.
Bank of America and Gilbert + Tobin are advising the TPG consortium. Macquarie Capital and Herbert Smith Freehills are working for Smartgroup.
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Smartgroup, which is chaired by former MacCap banker Michael Carapiet, has said it would be willing to recommend a binding offer at $10.35 a share.
The bid values Smartgroup at 14.2-times EBITDA, which is a big premium to the company’s ASX-listed peers including SG Fleet (8.6x) and McMillan Shakespeare (9x).
It is understood the offer came after weeks of talks between the suitor and Smartgroup’s board.
It’s an interesting consortium, mixing a big global private equity firm with a niche local technology buyout group and a deep-pocketed and hungry superannuation fund.
It remains to be seen whether TPG and Co can stand up the offer and/or whether there’s a rival bid out there. It is understood Smartgroup had its bankers testing appetite of other potential groups in recent weeks, before agreeing to exclusivity with the TPG group.
Smartgroup, which offers outsourced employee benefits and administration services, was listed in July 2014 by Malaysian billionaire Ananda Krishnan’s Smart Packages at $1.60 a share and traded above $12 in 2018 and 2019. It closed at $7.86 on Tuesday.
Smartgroup reported $109.4m revenue in the six months to June 30, down 2% on the same time lastyear. Net profit after tax and amortisation was $33.5m, which was 5% more than the first half of 2020.
Source: AFR
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