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Lamborghini dealer launches IPO
THE distributor group behind the Lamborghini and Alfa Romeo brands is seeking a Catalist listing to raise about $8.46 million to expand its automotive and lifestyle businesses in Singapore and overseas.
EuroSports Global Ltd yesterday launched its initial public offering of 80 million shares at 28 cents apiece, with a historical price-earnings ratio of 9.38 times based on the group's earnings per share of about 2.99 cents for the year ended March 31, 2013.
CIMB Bank Bhd is the sponsor and CIMB Securities (Singapore) is the underwriter and placement agent.
The 80 million invitation shares, which comprise 40 million new shares and 40 million vendor shares, represent 30.2 per cent of EuroSports Global's post-IPO share capital of 265 million shares. The IPO shares consist of 1.5 million for public offer and 78.5 million for placement.
The group, whose market capitalisation on listing will be $74.2 million, intends to declare a one-time special dividend of between $6 million and $8 million, subject to the completion of the sale and leaseback arrangement of its Teban Gardens Crescent showroom and service centre. It is expected to be payable later this year. At 28 cents per share, the dividend yield will be between 8.1 and 10.8 per cent.
The IPO closes at noon next Wednesday and trading is expected to start two days later at 9am next Friday.
EuroSports has been the Lamborghini dealer here since 2001. In 2004, it acquired the Alfa Romeo distributorship. Pagani was added in 2012, along with the deLaCour luxury watch brand.
In the past three years, EuroSports' annual revenue has ranged from $86 million to $113 million, with auto sales accounting for 80 per cent of this.
Executive chairman and CEO Melvin Goh said that Lamborghini has been "the key driver of our business". At the same time, luxury watches have higher gross profit margins than cars in percentage terms.
"If the economy is good, sales of our cars and luxury items will be good too," he added. "Plus, a lot of people are making their first million earlier these days, and they are more willing to splurge. That gives us the opportunity to grow the lifestyle business."
He added that the long-term plan was to go into "other things" beyond cars and watches.
For now, though, constructing a new facility at 7 and 9 Chang Charn Road in the Leng Kee motor belt is one of his immediate priorities. Construction work at the property, purchased for about $40 million more than a year ago, is expected to begin in 2015 and take about two years to complete.
With his personal touch, Mr Goh is generally acknowledged by the industry as the company's best salesman; his customers enjoy anything from birthday treats to customised coffee table books. After all, his favourite expression is "walk in as a customer, walk out as a friend".
But he insists that he is not the only one in the company who practises customer relationship management, and that the foundations of good customer service have been laid group-wide.
So even though he is stepping back bit by bit to focus on expanding the business, "we have a very strong team who understands our customer-centric corporate culture".
Mr Goh said: "If someone else eventually steps into my shoes, he will have that same focus."