NCR Suncorp
Published on August 27th 2018 in

Suncorp testing the waters on Capital SMART Repairs

According to the Australian Financial Review (AFR), Suncorp Group is believed to be considering the sale of the country’s second biggest smash repairer, Capital SMART Repairs.

The AFR ‘Street Talk’ column understands Suncorp has hired adviser Luminis Partners to review and test buyer interest in its investment in Capital SMART Repairs, which is expected to be worth more than $300 million. It is understood private equity and strategic investors have been told the business has $300 million revenue and about $30 million EBITDA.

Although it is early days, Suncorp is seeking a new capital partner for Capital SMART Repairs who could buy its 95 percent stake and join founder and minority shareholder Jim Vais on the share register. Capital SMART Repairs is majority owned by Suncorp’s Suncorp Insurance Ventures, which is the company’s investment arm used to scope, execute and manage its strategic insurance investments and is regularly reviewed.

The business was established in 2007 and has capacity for more than 200,000 repairs a year across its 45 sites in Australia and New Zealand. Most of its customers come from Suncorp-related insurance claims; 45 per cent of Suncorp’s personal insurance motor repairs made their way to Capital SMART last financial year, according to Suncorp’s annual results released last week.

Capital SMART Repairs had $290 million revenue in the year to June 30 last year, according to its most recent accounts filed with the corporate regulator, which was up from $243 million in 2016. Operating profit was $20.4 million in 2017 financial year, while it made $14.1 million net profit and had assets worth $61.6 million.

Capital SMART Repairs is Australia’s second biggest company in the $7 billion a year motor vehicle body, paint and interior repair market, according to IBISWorld data, with an estimated 4.3 per cent of the market. The biggest is ASX-listed AMA Group, which has a $522 million market capitalisation and whose panels business caught the attention of private equity suitor Blackstone earlier this year. The deal failed to complete after a negative tax relief ruling from the Australian Taxation Office in June.

The Capital SMART review comes as Suncorp chief executive Michael Cameron cleans up the company’s portfolio as private equity firms, including Blackstone, are known to consider the industry as ripe for consolidation.

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