Raisebook

Profitable Aftercare Auto Company | Incl 1:4 Attaching Options
RPM Automotive Group Limited
RPM Automotive Group Limited
ASX:RPM
  • The RPM Group is a group of businesses operating in the Australian automotive sector.
  • The Australian automotive aftermarket is large with a total addressable market across all sectors of over $32BN per annum.
  • The two founders of The RPM Group, Clive Finkelstein and Lawrence Jaffe, have a combined 40 years experience in the automotive industry and will join the Company’s Board and continue to lead the business in the future.
  • The Company is acquiring some highly regarded Australian automotive brands with a rich history of association in the sector.
  • RPM Group has been profitable for FY17 and FY18.
  • RPM Group had sales of $33.4M and Normalised EBITDA of $2.7M in FY 2018.
  • Market Cap on ASX listing of $17M.
  • Offer participants will also receive 1:4 Attaching listed options, with strike price of 25c, and a 2 year expiry date.
Raise Amount
$2,000,000
Offer Price
$0.2000
Closes
Jul 8, 2019

The RPM Group is a group of businesses operating in the Australian automotive sector.

Established in 2013, The RPM Group's businesses manufacture, wholesale and retail parts and accessories for motorsport, passenger and commercial vehicles, as well as, providing services such as mechanical repairs and tyre fitment.

The businesses that will comprise RPM Automotive Group Limited on completion of the proposed acquisition of The RPM Group and the year they commenced operations are;

  • Revolution Racegear (1993)
  • Carline Automotive Group (1991)
  • RW Tyres (2013); Competition Tyres (1965), Tyresome (2002)
  • Spider GT (2012)
  • Air Anywhere (2006)
  • Fix-My-Truck (1998)
  • Wildcat (1967)
  • Formula OffRoad (1988)

The proposed transaction will further increase the size of the group with the completion of the acquisitions of Air Anywhere and Fix My Truck.

The Offer

In 2018 RPM Automotive Group Limited (ACN 002 527 906) (formerly Kairiki Energy Limited (ASX: KIK)) entered into binding agreements to acquire 100% of the businesses that comprise The RPM Group.

The proposed transaction enables The RPM Group to obtain a listing on the ASX via a Reverse-Take-Over (RTO) of the Company.

RPM Automotive Group Ltd is undertaking a Public Offer capital raising of 25,000,000 New Shares at an issue price of $0.20 per Share to raise $5,000,000.

The minimum subscription is 10,000,000 New Shares at an issue price of $0.20 per Share to raise $2,000,000.

For every four shares issued under the Public Offer the Company will also issue an attaching Option. The options have a strike price of 25c, a two-year expiry date and will be ASX-listed.

The Lead Manager to the Public Offer is Novus Capital Limited.

The offer of the securities are made in, or accompanied by, a copy of the disclosure document which can be obtained by clicking on the "ACCESS DEAL" button on this page.

Anyone who wants to acquire the securities will need to complete the application form that will be in or will accompany the Disclosure Document.

Before making an investment decision, potential investors should read the Disclosure Document entirely, and seek professional financial advice.

An investment in Securities under this Prospectus should be considered highly speculative.

The business, assets and operations of the company (currently and post completion of the acquisition) are subject to certain risk factors that have the potential to influence the operating and financial performance of the Company in the future. These risks include but are not limited to: recompliance risks, removal of suspension significant dilution risk, business strategy risk and limited history, regulatory risks and supply chain risks.

The Risk Factors of this investment are detailed in Section 5 of the Disclosure Document.

Capital Structure

Total number of New Shares offered under this Prospectus 25,000,000
Number of shares held by Existing Shareholders (Post Consolidation) 9,435,743
Total number of shares on issue at Completion of the Public Offer 87,454,143
Gross proceeds of the Public Offer $5,000,000
Public Offer Price per New Share $0.20
Indicative market capitalisation of the Company $17,490,828

Indicative Timetable

Closing Date of the Public Offer 8-Jul-19
Allotment of New Shares (completion of the Public Offer) 11-Jul-19
Expected dispatch of holding statements 15-Jul-19
Anticipated date of trading of Shares listed for quotation on ASX 17-Jul-19

Pro-Forma Historical Financial Performance

Half year ended Dec 2018, Reviewed Actual

Year ended 30 June 2018, Audited Actual

Year ended 30 June 2017, Audited Actual

Revenue 17,042,639 33,415,070 22,492,759
Cost of Goods Sold 11,486,055 22,027,376 13,678,629
Gross Profit 5,556,584 11,387,694 8,814,130
Profit before Income Tax Expense 1,108,466 1,905,508 1,250,151
Profit from Operations 809,305 1,397,630 1,115,195

Note: Please refer Section 2.1.9 of the Disclosure Document for detailed historical financial performance.

RPM Group Businesses

Revolution Racegear: is a manufacturer, importer, wholesaler and retailer of soft accessories and safety equipment for Australian motorsport participants.

Carline Automotive Group: is a nationwide licensee of automotive servicing and repairs stores for passenger vehicles, focussing on exhaust and under-car repairs.

RW Tyres: is the Company’s strategy to create a chain of tyre retail stores via acquiring established businesses in the sector, with two stores currently acquired.

Spider GT: is an importer and wholesaler of tyres for commercial vehicles. (Spider GT is a subsidiary of RW Tyres.)

Air Anywhere: is a roadside assistance and tyre fitment service for commercial vehicles in Victoria.

Fix My Truck: is a nation-wide information service for the transport industry with customers paying a subscription fee for 24/7 roadside assistance for commercial vehicles.

Wildcat: designs, manufactures and distributes automotive performance and emissions products for passenger vehicles.

Formula OffRoad: designs, manufactures and distributes automotive accessories, such as, towbars, siderails, bull bars, nudge bars and roof racks. (Formula OffRoad is a subsidiary of RW Tyres.

Investment Highlights

Favourable industry fundamentals

The Australian automotive aftermarket is large with a total addressable market across all sectors of over $32 billion per annum. It is also relatively stable, as consumers need to maintain their cars due to wear and tear. Automotive aftermarket demand should continue to grow due to a growing Australian car fleet.

Management team with deep industry experience

The two founders of The RPM Group, Clive Finkelstein and Lawrence Jaffe, have a combined 40 years experience in the automotive industry and will join the Company’s Board and continue to lead the business in the future. Clive and Lawrence both have successful track records of acquiring, operating and developing automotive businesses and complement each other with Lawrence's financial and merger & acquisition skills and Clive's hands-on operational experience.

Positioned for growth

Many of The RPM Group’s businesses are positioned to grow strongly, both organically and via acquisition. In acquiring The RPM Group the Company is gaining a national footprint with operations in all five states in multiple sectors of the automotive industry including wholesale, retail and manufacturing.

Well-known brands

In acquiring The RPM Group the Company is acquiring some highly regarded Australian automotive brands with a rich history of association in the sector. The Company will also gain exclusive distribution rights for a number of highly respected brands.

Clear plan

Management has identified a number of opportunities in the Australian automotive market and plan to aggressively grow the business both organically and via acquisition.

Robust profile and ASX Listing

The RPM Group has a meaningful underlying business that is long-standing, profitable and able to grow. Its listing on the ASX via the acquisition by the Company will give the combined entity the ability to grow via providing access to capital funding as well as the ability to offer equity and cash in future acquisitions of other automotive businesses.

Use of Funds

Item Minimum Raise ($AUD) Maximum Raise ($AUD)
Source of funds
Issue of Public Offer Shares 2,000,000 5,000,000
Bank debt facility 1,000,000
Use of proceeds
Pay the costs of the Public Offer 500,000 750,000
Fund the cash payouts to Vendors 2,500,000 2,500,000
Fund the Company’s growth initiatives 1,750,000
Total 3,000,000 5,000,000
This deal closed on July 08, 2019