4WD firm Auto Solutions into reverse on ASX debut
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Automotive Solutions Group MD Tanya Mason says she has lots of skin in the game and is lifting her eyes to the long-term upside. Bradley Kanaris
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by Simon Evans
Automotive Solutions Group went into reverse in its ASX debut on Wednesday but managing director Tanya Mason says she's convinced of the long-term upside for the four-wheel drive and sports utility vehicles accessories company.
"This is a long-term proposition," she said on Wednesday.
Automotive Solutions Group increased the level of its capital raising to $30 million in an initial public offering in which it originally intended to raise $25 million, but had a subdued opening to life as Australia's newest ASX-listed company. Even high-profile floats such as chicken processor Inghams have struggled in the past few weeks.
The issue price in the Automotive Solutions Group IPO was $1 per share, but the opening trade was at 95¢ and by early afternoon on Wednesday it was hovering between 92¢ and 94¢.
The company is acquiring eight separate businesses involved in design, manufacturing, retailing and performance technology in accessories and performance upgrades for 4WD vehicles and SUVs. They include Roo Systems in Queensland, Umhauers in Geelong, Deering Autronics in Perth and JDR Motorsport in NSW.
Ms Mason said it was a little disappointing to have the opening trades under the issue price.
"I think in the first few days you will see a fair bit of volatility," she said.
But she said the longer term trends were undeniable and Automotive Solutions Group was in a big growth industry. Sales of 4WDs and SUVs are booming in Australia, and now account for 50 per cent of all new vehicles sold. This is up from 33 per cent six years ago.
She believes the trend will only accelerate and that even more buyers will steer away from sedans, because of demand for more space inside a vehicle, being able to sit higher on the road, and the rising numbers of enthusiasts who like to head outside of big cities on weekends and days off.
Ms Mason is the fifth largest shareholder in the company with a stake of almost 4 per cent.
"I've got plenty of skin in the game and so have many of our employees. We all see the long-term opportunity here," she said.
The companies under the Automotive Solutions Group parent entity sells a range of products including bull bars, roof racks, nudge bars, snorkels and also undertake performance upgrades of regular vehicles.
Ms Mason said the company was eyeing more specialist products to sell through its retail outlets in the first instance, and then would look for a bigger acquisition after six months, because it wants to keep building more scale.
The company might also have the most clever ASX ticker on the stock exchange. Its trading code is 4WD. Ms Mason said she had telephoned the ASX in the lead-up to the listing process to request it.
"I rang up and asked for 4WD," she said.
Ms Mason said investor demand in the lead-up to the IPO resulted in the decision to expand the raising to $30 million, which enabled the company to begin life on the ASX as a debt-free entity.
The company's chairman is former Mitsubishi Motors Australia chief executive Tom Phillips.
