PRIVATE EQUITY FIRM BUYS INTO SYDNEY DEALERSHIP GROUP

Private equity firm Quadrant has bought a considerable share of the Peter Warren Automotive Group, which operates nine dealerships in Sydney and the Gold Coast, continuing a trend towards consolidation in the industry.

The capital injection by Quadrant continues recent consolidation in the automotive retailing business, as seen in the US, with billionaire Warren Buffet’s purchase of dealerships, and locally with the likes of Automotive Holdings Group (AHG) and AP Eagers.

Beginning in 1958 as a small used car yard, the Peter Warren Automotive Group now generates $1 billion in annual revenue, employing 1,100 people and selling around 21,000 vehicles per year on behalf of about two dozen manufacturers.

Peter Warren Automotive Group’s flagship dealership is located at Warwick Farm in Sydney’s west, although it also has a strong presence in the city’s east via Mercedes-Benz North Shore.

Peter Warren Automotive Group chairman and CEO, Paul Warren, said the Quadrant investment will increase the group’s ability to acquire extra assets and generate greater benefits of scale.
Mr Warren said the increasing cost of technology made creating economy of scale essential, sharing costs across the group’s various sites.

The group had been in talks with Quadrant since April. Mr Warren said the deal was not influenced by the ASX listing of Autosports Group, which operates 25 car dealerships and two crash repairers.

The Autosports float raised $160 million in capital from an issue price of $2.40 a share. It made a solid debut on November 16, however has since weakened.
Autosports CEO, Nick Pagent, said recently that his company was keen to grow via acquisitions and greenfield sites, concentrating on premium brands, which are growing faster than volume brands.

Autosports has joined AP Eagers and AHG on the stock exchange and we could see more. Considering our industry is a high-volume, low-margin enterprise, many players are now thinking ‘bigger is better’ in order to add scale.

This almost certainly won’t be the last of this kind of deal.

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