Business

Knutsford targets $100 million

Luxury bus service provider to go public

Wednesday, December 25, 2013    

Print this page Email A Friend!


LUXURY coach provider Knutsford Express aims to raise nearly $100 million through an initial public offer (IPO) of 20 million shares or 20 per cent of the company on Friday, the day after Boxing Day.

Knutsford operates its bus services along Jamaica's two major corridors for ground travel. Its offering comprises scheduled coach transportation, courier service, private hire, and special event shuttles.

The IPO, for which the lead broker is Proven Wealth, is priced at $5.11 a share. According to the company's prospectus, the proceeds from the issue will be used for working capital support, acquisition of a new coach, and upgrade of the existing fleet of 14 buses, as well as payment of the IPO expenses.

"Knutsford Express will be the second company we are taking to the Junior Market and it gives us great pleasure to do so. They have created a niche market that has opened the options of travel around Jamaica while allowing customers to leave their vehicles, save money, and instead enjoy a luxury coach experience," said Proven Wealth Limited CEO, Chorvelle Johnson.

"Given their performance over the past seven years we believe that this offer will be a success and represents an excellent option for investors to become part owners."

Knutsford was incorporated in 2006, launching with 28 departures weekly between Montego Bay and Kingston, the island's two major cities. The company now has 105 departures weekly and has expanded its reach to Falmouth, Negril, Savanna-la-Mar, and Mandeville.

It consolidated its operations and acquired routes across the south coast of Jamaica with its acquisition of Southcoast Express earlier this year.

The current shareholders in the company are Oliver Townsend (44 per cent), Anthony Copeland (32 per cent) and Gordon Townsend (24 per cent).

"We are confident that the Proven Wealth team will help us to accomplish our goals through this IPO," Oliver Townsend, Knutsford's president and CEO said in a statement.

"Since inception we have improved on our product offering which now ranges from scheduled inter-city luxury coach transportation, courier service, private hire, and special event shuttles," he added.

The company's prospectus reveals that Knustford has grown annual revenues by an average of 27 per cent the last five years up to $203.2 million for the 2013 financial year. Net profit stood at $51.1 million at the end of the review period.

At the end of the 2013 financial year, Knutsford's asset base was $133 million, with annual growth of 52 per cent the last five years attributed to increase in its coach fleet. Total liabilities, consisting mainly of trade payables and bank debt, has risen from $15 million to $50 million over the period, the prospectus indicated.

Over the same period, selling, general and administrative expenses have increased by an average of 19 per cent to $139 million, with the company attributing the increase primarily to fuel charges "that have risen in relation to operational demand and general increases in the price of fuel".

"While our fuel costs increased by 30 per cent in 2013 compared to 2012 and by a CAGR (compound annual growth rate) of 35 per cent from 2009 to 2013, as a percentage of revenues, our fuel costs have moved from 15 per cent in 2009 to 19 per cent in 2013," the company said in its prospectus.

"We are comforted that this would have been significantly higher had we not aggressively pursued our acquisition of new highly efficient coaches which deliver a 25 per cent unit over unit improvement," the company added, stressing that its "fuel-efficient buses and the unfortunate reality of fuel price increases actually provide the strongest barrier to competition".

Interim results for the first quarter ending August 31, 2013 show revenues for the period amounting to $71 million, a 31 per cent increase over the corresponding period last year.

The company projects that its future performance will be boosted by the maturation of routes acquired from SouthCoast and greater efficiencies. Its investment in renewable energy should yield 40 per cent reduction in electricity costs, according to the prospectus, which added that the fuel cost to revenue ratio should also fall with the addition of more fuel-efficient vehicles.

If the IPO is successful, the company will list on the Jamaica Stock Exchange Junior Market. Proven Investment Limited (PIL), the parent of lead broker Proven Wealth, will be taking up almost 10.2 million of the reserved shares in the offer at $4.88 a share.

"We believe that Knutsford Express provides an excellent opportunity for PIL to expand its private equity portfolio in a company that's profitable, professionally managed, and has great prospects for growth in the near future. We are pleased to be taking part in the offer and expect that it will be well received by the market" noted Johann Heaven, senior vice-president of investments.

ADVERTISEMENT

POST A COMMENT

HOUSE RULES

 

1. We welcome reader comments on the top stories of the day. Some comments may be republished on the website or in the newspaper – email addresses will not be published.

2. Please understand that comments are moderated and it is not always possible to publish all that have been submitted. We will, however, try to publish comments that are representative of all received.

3. We ask that comments are civil and free of libellous or hateful material. Also please stick to the topic under discussion.

4. Please do not write in block capitals since this makes your comment hard to read.

5. Please don't use the comments to advertise. However, our advertising department can be more than accommodating if emailed: advertising@jamaicaobserver.com.

6. If readers wish to report offensive comments, suggest a correction or share a story then please email: community@jamaicaobserver.com.

7. Lastly, read our Terms and Conditions and Privacy Policy



comments powered by Disqus
ADVERTISEMENT
ADVERTISEMENT

Poll

If you found $10 million in the street would you return it to the owner?
Yes
No


View Results »


ADVERTISEMENT

Today's Cartoon

Click image to view full size editorial cartoon
ADVERTISEMENT