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Profits rise at SocGen's car leasing arm ALD Automotive ahead of IPO
[PARIS] ALD Automotive, the car leasing arm of French bank Societe Generale, reported on Friday a 21 per cent rise in its net profits last year, as it prepares for a market flotation which could value it at more than 6 billion euros (S$8.915 billion).
SocGen plans to sell shares in ALD in an initial public offering (IPO) towards the middle of this year, while retaining a majority holding in the company, which manages a worldwide fleet of 1.4 million vehicles.
Two financial market sources said ALD could be valued at more than 6 billion euros, while one said SocGen was willing to sell a 20-30 per cent stake.
In what could be a similar, benchmark deal, Volkswagen and Dutch firm Fleet Investments BV sold fleet management company LeasePlan Corporation to private investors for 3.7 billion euros in 2016, a multiple of nine times its 2015 underlying net profit. ALD made a net attributable profit of 511.7 million euros in 2016.
SocGen, which bought Deutsche Bank's European vehicle leasing operations back in 2001, has said the aim of the IPO is to provide ALD with the means to achieve its growth targets so that it becomes a global leader in the sector.
Along with European rivals ALD faces some uncertainties over fleet values, as tighter emissions regulations and some bans on diesel cars could in turn lead to losses for companies with large diesel fleets, as the vehicles are written down to reflect falling re-sale values.
However, the company said last year that it had assessed all potential impacts of the matter within its sales and pricing strategy.
ALD expects services and financial margins to grow annually at approximately 8 to 10 per cent, it said on Friday. It also aims for a dividend payout ratio of 30-40 per cent of net profits.
The company says it holds the top spot in Europe and is among the top three in the world in the full-service leasing and fleet management market.
It has recently opened new subsidiaries, such as one in Peru, and made acquisitions, such as that of French company Parcours, which has fleets in Spain, Portugal, Belgium and Luxembourg.
Around 70 per cent of its profits before tax came from operations in western Europe in 2015, while emerging countries accounted for about 8 per cent.