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AUSTRALIA has seen its third publicly listed automotive retailer as Peter Warren Automotive on Tuesday exited its relationship with a private equity firm and moved to the public arena as a $574 million car business.

The stock opened on the ASX at the $2.90 issue price and went as high as $3.53 in early trade. It closed 19.3 per cent higher at $3.46.

The value will make Peter Warren Automotive (PWA) the nation’s second biggest car retailer by value, eclipsing Autosports Group Ltd’s $482m and yet below the biggest, Eagers Automotive Ltd, valued at $4.28 billion.

PWA combines the Warren and Frizelle family assets, comprising 17 dealerships and 70 franchised operations on the east coast. PWA leaves behind its supporting vehicle, Quadrant Private Equity, that invested heavily in the dealership group in November 2016.

That investment led to available funds for PWA to buy Frizelle Sunshine Automotive, bringing the Frizelle family into the merged business.

With the listing, Quadrant will dilute its shareholding to 9.4 per cent and the Frizelle family will hold less than five per cent.

At the same time, PWA CEO Mark Weaver told GoAutoNews Premium that the Warren family has increased its investment in the listed vehicle by $110m, now equivalent to 35.1 per cent as it folds in family-owned real estate and buys additional shares through the initial public offering (IPO).

The IPO was open to the public making about 90 million shares available at $2.90 each (for $260 million from the public domain) from a total of 166 million company shares.

The response was so strong that the IPO closed ahead of schedule after being oversubscribed more than twice. Institutions took $200m leaving the public with $60m of shares available.

Mark Weaver

Mr Weaver said the support from institutions and the public was heartening for the future of the business but also for the automotive retail sector in Australia and for the sharemarket in general.

“I think it’s healthy for the market and that it also generates lots of interest in our industry,” he said.

“That’s exciting. So we are delighted, pleased and humbled to now be in that league with Eagers and Autosports.”

Mr Weaver agreed that for consumers, it would give them confidence that they can deal with PWA knowing that it has the corporate strength of a listed public company.

He said the experience with Quadrant was invaluable and a “wonderful journey”.

“They didn’t have a controlling stake,” he said.

“The investment was timely and we’ve doubled our size compared with when Quadrant came onboard in 2016.

“As a result of that transaction, we find ourselves now four and a half years old in a position where they have helped us develop our corporate thinking and structuring ourselves through all the right platforms and processes, to go to the next step which is a public company.

“Everyone has been in agreement about becoming a public company since we discussed it with shareholders back in November. It’s the right pathway and also provides the private equity shareholders with an opportunity to find a market for their shares.”

Mr Weaver said that neither the Warren nor Frizelle family “has taken anything off the table.”

Funds will be used to expand the business and bring in two major properties into the company – Warwick Farm in NSW and the Southport properties in Queensland – which Mr Weaver said were substantial assets to become included in the balance sheet.

He said the property investment was likely to continue but rules out a timeframe, indicating that it would probably be triggered in the near future.

He also said expansion through acquisition was a clear goal for the listed company.

“There’s definitely no question that we have an evolving position on growth,” he said.

“Our mid-to-long-term strategy is to expand and this capital raising gives us a reasonable stepping stone to go out and try to achieve that. 

“We have always been very disciplined about the way we go about acquisitions. We like to find businesses that are culturally aligned to us, deep-rooted family-operated businesses that have similar culture and a pride in the business.

“Of course we offer that to the businesses we align with. We will look to expand but the timeframes are on hold for now,” Mr Weaver said.

By Neil Dowling

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