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Stargroup creates $15m war chest for further mergers and acquisitions

Perth-based Stargroup has amassed a $15m war chest to complete its purchase of Indue’s ATM business and fund further acquisitions, indicating that 2017 might be another standout year at the financial technology and ATM machine business.

Stargroup, which is dual listed on the ASX and Frankfurt Stock Exchange, said on Friday it had now fully executed all agreements relating to the hotly-anticipated acquisition of Indue’s ATM machine switching, settlement, processing telecommunications and reseller assets, with settlement scheduled for completion late January.

Indue provides services to around 70 ATM machine operators involving some 1,700 ATMs, 1,350 modems and it processes 12 million ATM machine transactions per annum.

The acquisition, once completed, is expected to bolster the bottom line at Stargroup by around $1.7m in EBITDA per annum.

In Friday’s funding update, Stargroup also said it had agreed to commercial terms for a $15m debt instrument to fund the Indue acquisition, however the balance of the facility  would also be used to fund other potential acquisitions in the period ahead.

The debt facility agreement had been executed with a Sydney based credit fund, on commercial terms, company management said.

Stargroup chief executive and executive Todd Zani said: “We are very excited to announce to the market that the asset sale agreement and all other agreements with Indue have been executed and that this transaction is proceeding on an unconditional basis.

“We are also exited to announced that a Sydney based credit fund has approved the funding for this acquisition on commercial terms which not only enables us to complete this acquisition but it will also enable us to explore further merger and acquisitions without the need to issue further capital.”

The announcement is a bullish signal from Stargroup heading into 2017 as the company experiences a stellar, and prolonged, period of growth.

Last week, Stargroup posted its 12th record quarter of revenue in the three months to December, representing year-on-year ATM revenue growth of over 200 per cent.

Mr Zani said the $15m war chest would also enable Stargroup to accelerate its EFTPOS business opportunities in 2017.

“The 2016 year was a truly transformations year for the business and the 2017 year looks even better,” he added.

Stargroup is the only ASX listed company deploying ATM machines in Australia and it also has an 11 per cent interest in NeoICP Korea Inc, a Korean business that manufactures the ATM machines that Stargroup use and sell. 

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Stargroup (STL)

Share Price

Closing price for the last 90 trading days
Source: Morningstar

Total Shareholder Return as at 29/06/18

1 year TSR5 year TSR
4thAdvance NanoTek1986%102%
302ndGoldfields Money27%5%
496thWestStar Industrial-4%-54%
505thStargroup-6%-11%
767thCarnegie Clean Energy-61%-6%
722 WA (and selected non WA) listed companies ranked by 1 year TSR relative to other companies with similar revenue
Source: Morningstar

Share Transactions

09/08/17
$12k Bought
27/06/17
$0 Other
27/06/17
$35k Bought
Total value as at the date of the transaction
Source: Morningstar

Revenue

87th↑Stargroup$563k
96th↑Carnegie Clean Energy$5.3m
97th↓Advance NanoTek$5.1m
100th↑WestStar Industrial$4.6m
101st↓Goldfields Money$4.2m
239 listed industrial companies ranked by revenue.
Source: Morningstar

Remuneration from Stargroup

1366thJay Kim$29k
Ranked by total remuneration from all listed WA companies

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