Mobile Tyre Shop, founded by Challenger’s former head of leasing, is parading its wares to potential investors for a $20 million pre-IPO round that is expected to be shopped as far as Tokyo Stock Exchange-listed tyre manufacturing giants.
Its pitch to investors, seen by Street Talk, was that revenue had grown 36.2 per cent year-on-year while costs were coming down. Now, it needs money to expand its fleet and ramp up marketing.
Mobile Tyre Shop has 42 vans that drive to customers in 3300 suburbs to change or balance tyres. It’s operating in capital cities and has its foot in the door in regional areas and secondary tier cities via relationships with car rental companies like Hertz.
Its third channel of sales is working with other online tyre retailers (Bridgestone, Tyroola, Tyresales) as their onsite fitting partner.
All of that boiled down to $11.9 million trading revenue for the 2022 financial year, and the company expects to triple it to $35.7 million in two years.
It’s still posting losses on an EBITDA basis – $4 million-plus for 2022 – but reckoned the business was more efficient and reducing costs, notwithstanding the loss of corporate business during COVID-19.
Investors were told Mobile Tyre Shop’s capital cities footprint was bringing new potential customers in the door, while online marketing meant ecommerce sales had grown and made up 58 per cent of the total sales in the June half. The raise would allow it to expand its fleet size to 52 this financial year.
The pitch deck also dangled the opportunity for the business to branch out from tyres and deeper into the automotive afterparts market – think, car batteries and windscreens – which was a $5 billion market.
The business was founded by Travis Osborne, who has Challenger Financial Services’ head of leasing. He had also worked at The Gandel Group, Spotlight Property Group and Westfield.
Melbourne corporate adviser David Williams is Mobile Tyre Shop’s chair and largest shareholder. His firm Kidder Williams is running the raising, which was expected to target about a $50 million pre-money valuation.
It would be interesting to see who ends up on its shareholder register.
There’s no doubt Mobile Tyre Shop’s growing, but any potential investor would want to know how far it is from posting profits.
Nevertheless, it’s the kind of business that could be tried on for strategic fit by automotive clubs like NRMA and RACV, or local automotive afterparts giant Bapcor. It also wouldn’t be surprising to see it shopped to overseas auto parts manufacturers like the NASDAQ-listed Goodyear Tire & Rubber Co, Tokyo-listed Bridgestone and Toyo Tires, Frankfurt-listed Continental, Seoul-listed Hankook Tire, Milan-listed Pirelli or Shangahai-listed Shandong Linglong.
Germany’s Continental, in particular, knows the lay of the land, having paid $350 million to buy Wesfarmers’ Kmart Tyre and Auto Services in 2018.
Mobile Tyre Shop is kicking off the raising talks just as Tyre retailer Tyremax courts M&A interest from the likes of Bain Capital. Tyremax is a much bigger business with expected $50 million EBITDA and has been tipped to fetch around the $500 million mark when sell-side adviser Miles Advisory reboots the auction next year.
https://www.afr.com/street-talk/mobile-tyre-shop-revs-up-for-pre-ipo-round-20221208-p5c4p3