Champ Ventures plans SG Fleet IPO in Q1

The private equity firm plans to sell its 42% stake in the motor vehicle fleet management business in an IPO worth up to $500m.

Buyout firm Champ Ventures plans to sell its 42% stake in motor vehicle fleet management and leasing company SG Fleet in an initial public offering worth up to $500 million, due by the end of March.

SG Fleet will be the first sizable initial public offering confirmed for the Australian bourse in the first quarter.

Morgan Stanley and Goldman Sachs Group Inc have been appointed joint lead managers of the IPO after winning the mandate from rivals in a deal some investment bankers estimate is worth between $400 million and $500 million.

South Africa’s Super Group, a supply chain manager, has a 51% stake in SG Fleet. SG Fleet management has a shareholding in the company of about 7%.  

“Super Group notes that Champ is currently exploring alternatives for its 42 per cent minority shareholding,” Super Group said in a statement. “This is consistent with the shareholding arrangements entered into between Super Group and Champ in 2011.”

Equity capital markets bankers estimate that between $3 billion and $4 billion worth of IPOs may be sold to investors by the end of March, following the 15% gain in the S&P/ASX 200 Index since January 1 last year.

But the poor performance of IPOs in December, notably TV broadcaster Nine Network Entertainment Co. and transport company Pact Group Holdings Ltd, which are both trading below their IPO price, is making some wary about investing in new shares.

Last month’s ASX debuts of Nine and Pact may damper valuations that Morgan Stanley and Goldman Sachs hope they can get for SG Fleet, says a banker, who said reports of a $600 million IPO of the company were too high.