Up-for-sale pallet pooling business Loscam ANZ is making $90 million earnings a year at about a 50 per cent margin, making it one of the most profitable businesses of its kind globally.
As Goldman Sachs and UBS bankers prepare to send an information memorandum to potential acquirers, Street Talk has got its hands on the sale flyer sent out last month to try to lure bidders into the auction.
The flyer, dressed in red (like its wooden pallets) and yellow, said Loscam ANZ had a 7 million-plus pallet pool, recorded $170 million revenue and $90 million EBITDA in the 2021 calendar year and 90 per cent free cash flow conversion.
Loscam ANZ was said to have better EBITDA margins and a superior cost structure to rival Brambles.Brook Mitchell
It said the division, part of the wider Loscam which also has operations in south-east Asia and China, had grown revenue at 9 per cent a year in the three years to December 31, and had 34 per cent of the Australian market.
In a clear sign Goldman Sachs and UBS were trying to draw in a newcomer to the sector, the bankers spent ample time explaining pallet pooling “a share-and-reuse model” where Loscam rents pallets and other storage products to customers.
The going rate on a pallet is about 5¢ a day, the flyer said, while the pallet pooling was used across 90 per cent of the industry.
The bankers made an eight-point pitch, starting with Loscam ANZ’s “mission-critical service”, its geography as the most attractive pooling market globally, its 15 years of uninterrupted growth, and market-share winning model.
The other points included sustainability (reusing pallets), its long-tenured management team, financial profile and potential growth levers.
The business is known to be attracting early interest from private equity funds and infrastructure managers. Loscam’s private equity owners hired Goldman Sachs and UBS to run the auction at the beginning of the year.
The obvious comparison point is Australian bigwig Brambles - not long ago in talks with CVC Capital Partners. Although if you believe the Loscam camp, its EBITDA margins and cost structure leaves the bigger Brambles for dead. [Brambles’ CHEP has the other 66 per cent of the Australian pooling market and 78 per cent of NZ].
Tyrekickers expect the formal sale documents to arrive any day, which would kick off the auction.
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