APOLLO TO DRIVE GROWTH WITH ASX IPO

Written on the 6 October 2016

APOLLO TO DRIVE GROWTH WITH ASX IPO

APOLLO Tourism & Leisure (ATL) will raise $50 million in an upcoming ASX IPO that values the company at $144.96 million.

A total of 114.96 million shares will be issued, with 50 million of those sold at $1 per share to raise cash that will be used to continue the Brisbane company's growth.

In the past two years, revenue has increased from $109 million in FY14 to $156 million in FY16 - growth of 19.44 per cent. It is expected to reach $183 million in FY17.

CEO and managing director Luke Trouchet says Apollo's growth strategy is focused on leveraging tourism industry growth, a cultural shift to free and independent travel and an ageing Australian population who can afford to buy an RV.

"Apollo has established a strong position on the west coast of the USA with an estimated 9 per cent of the national rental fleet, and is expanding into new locations serving Florida and New York,'' says Trouchet.

"The next step is to open in Orlando and New York in May 2017, just in time for the high season in that market.

"This is a big reason we are tapping into the public market, to supercharge that growth, open more locations and add more fleet into service."

By having locations on both US coasts, it will also allow the company to offer one way journeys across the country.

Another avenue for growth is through rolling out new retail centres in Australia's major cities to drive RV sales.

Apollo has the exclusive licence to manufacture and import Winnebago motorhomes and to import the Adria brand in Australia and New Zealand, while it also produces its own Talvor RVs.

"We consider the rental market mature, but there is a huge opportunity to expand in the new motor home and new van sales," Trouchet tells Business News Australia.

"Traditionally, we have built our own motor homes for the rental fleet, but now we are building the brand to sell new, direct to the public."

Apollo recently added locations at Sydney and Melbourne in addition to its existing showroom in Brisbane.

"There is a huge opportunity to grow our market share in this segment."

Australia's ageing population will help drive this growth, as over the next 10 to 30 years the country's baby boomers will retire with plenty of money to spend.

Of the proceeds of the float, $30 million will go to the founding shareholder, $12 million will be used to pay down debt, $5 million will be used to fund growth and $3 million will be spent on the cost of the offer.

ATL will also receive $5.5 million from Salamanda Travel, which is owned by the Apollo founders, soon after listing in repayment of an existing loan.

The market capitalisation of the business represents a price to earnings ratio of 11.72 based on forecast FY17 net profit after tax of $12.4 million.

Apollo, which was established in 1985 by Gus and Carolyn Trouchet, manufactures, rents and sells a range of RVs through its operations in Australia, New Zealand and the United States of America, and has a 20.22 per cent strategic investment in Canadian listed RV sales and rental company, CanaDream Corporation.

The business was taken over in 2001 by sons, Luke and Karl (CFO and executive director).

Growth has been underpinned by expansion of rental operations in the USA, as well as Australia and New Zealand. Apollo has also benefited from improved fleet management and increasing revenue from sales of ancillary products.

Apollo has manufacturing operations in Brisbane and Auckland, producing RVs for its rental fleet and the retail market.

The company has a rental fleet of more than 3,000 vehicles and has 17 rental offices in Australia, New Zealand and the USA run by 300 staff. CanaDream operates an additional seven rental offices in Canada and has a fleet of around 1,000 RVs.

Post-listing, new shareholders under the Offer will hold 34.49 per cent of total shares on issue, with the remainder held by the current shareholder of Apollo. Luke Trouchet and Karl Trouchet will be joined on the Apollo board by non-executive chairman, Stephen Lonie and non-executive director, Sophie Mitchell.

Lonie is a former managing partner of KPMG Queensland and is a non-executive director of Corporate Travel Management, Retail Food Group and MyState. While Mitchell is a Director of Morgans Financial Limited and a non-executive director of Silver Chef and Flagship Investments.

The offer opens on 17 October and closes on 27 October. Shares are expected to be allotted on 31 October and commence trading on the ASX on 4 November.

It is fully underwritten by Morgans Corporate.

 


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