AUSTRALIA’S possible third major listed car retailer has been independently valued at between $450 million and $1 billion as a booming car market activates interest in a public float of Peter Warren Automotive.

The dealership group has 17 locations, had 28,000 sales in 2020 and annual revenue of $1.5b to be the second biggest auto retailer in the country after Eagers Automotive Ltd which has a market capitalisation of $3.79b.

Peter Warren Automotive (PWA) includes James Frizelle’s Automotive Group which it bought in mid-2017.

PWA is majority owned by Quadrant Private Equity, a capital investment firm that has financially backed other businesses including Bursons (now Bapcor Ltd) before listing. It is also the major shareholder in Graysonline.

PWA and Quadrant have not committed to a public listing but there has been significant work to pave the way to becoming a public company.

PWA CEO Mark Weaver told GoAutoNews Premium only that it is “currently considering options for additional sources of capital for growth.”

“We consider ourselves to be well positioned to play a role as an industry consolidator,” he said.

PWA told GoAutoNews Premium that it was important to retain the culture when contemplating a public listing.

“Both the Warren and Frizelle names, that have been above the doors for a long time, have been established in a culture that has resonated with our teams and customers alike for decades,” Mr Weaver said.

“Nothing will change that. We have grown two tremendous family companies into one large one and are poised to use those learnings to execute our strategy going forward, enabling the very same values and culture to add value long into the future.”

Analysts have been reported by The Australian newspaper this week to believe a public listing would value PWA at up to $1 billion.

The newspaper reported that Morgan Stanley estimated the car retailer as being worth between $449m and $1b on the strength of the booming car market.

Morgan Stanley estimates the business is worth between $449m and $601m including debt and the price equates to between 13.9 and 18.6 times its forecasted annual net profit.

Analysts at Jarden said it is worth between $826m to $1.007b, including debt, while Jefferies analysts told The Australian that the business is worth between $609m and $696m.

Morgan Stanley said PWA can generate revenue of $1.6b in 2021 from 22,237 new-vehicle sales and 8,349 used-vehicle sales and $32.2m of net profit, up 21 per cent from the previous corresponding period.

Jarden told The Australian that PWA will make $76m in earnings before interest, tax, depreciation and amortisation for the 2021 financial year and $77m for the calendar year.

He added that a stronger housing market will play a major role in boosting vehicle sales and that will impact on PWA’s earnings.

The Australian said PWA has $21.7m on its balance sheet and no corporate debt – aside from its floorplan financing.

It plans growth in earnings through bigger car sales and acquisitions.

It is reported to have a balance sheet showing that finance and insurance contributed 11.5 per cent of its gross profit for the 2020 financial year.

Of its overall sales, 65 per cent came from new-car sales and 16 per cent from used-car sales.

2020 saw 917,000 new vehicles sold in Australia. While that was down on the 20-year average of one-million units, according to The Australian, sales rocketed in November and December.

PWA owns two of its properties, including its flagship 8.8-hectare site at Sydney’s Warwick Farm, noted for its reproduction Sydney Harbour Bridge.

Quadrant took a major shareholding in 2016 and under its control, it combined with James Frizelle’s Automotive Group, which was established in 1985 and is one of the biggest automotive retailers in Queensland.

By Neil Dowling