Dealer group delays IPO plans

Car dealer group Armstrong’s has announced it is delaying plans to dual list on the main board of the New Zealand Stock Exchange and Australian Stock Exchange because of market uncertainty. 

Troy Kennedy, chief executive officer, explains market turbulence, macro-economic conditions and geopolitical events are the trifecta of reasons behind the company’s move.

“This is a pragmatic decision to see us come to market under more stable investment conditions,” he says. 

“It was important to the team we get this right for investors and the business. We’re prepared to be patient and to continue executing on our growth agenda in the meantime.”

Executives from Armstrong’s, which operates 15 dealerships across Auckland, Wellington, Christchurch and Dunedin, had pitched plans for a dual listing to institutional investors nationwide during March.

Kennedy, pictured, notes a lot of effort goes into an initial public offering (IPO) process and the group appreciated the time prospective investors spent with management to understand its business model. 

“We received strong interest from a broad range of private and institutional investors, so we want to thank them all for their time spent with us.

“While we have hit pause for now, we have a number of significant strategic initiatives to progress this year. We believe the market will further consolidate in the coming years and Armstrong’s intends to play a lead role during this period.

“We continue to see strong month-on-month customer demand as well as strong growth in our order book, supported by the government’s clean car discount programme.”

Armstrong’s expects to record $549.8 million revenue in the 2022 financial year and $627.4m in FY23, with earnings of $37.5m and $45.6m across the forecast period.

Kennedy adds that whenever the company decides to renew its IPO plans, staff hope to be able to engage with potential investors in person, rather than the virtual meetings held recently because of Covid-19.

In the meantime, Armstrong’s, which was founded by Rick Armstrong in 1993, says it has plans in progress for organic growth tied to building and further diversifying the brand portfolio, coupled with bespoke real estate development across the Auckland, Wellington and Christchurch markets.

Armstrong’s has signalled Jarden and UBS will remain joint lead managers for its IPO.