A subsidiary of COG Financial Services Limited has acquired a 70 per cent interest in Chevron Equipment Finance for $7 million.
COG Financial Services Limited (COG) has announced that its business and equipment finance subsidiary QPF Holdings Pty Limited (QPF) has acquired a 70 per cent interest in Club Transport Finance Pty Ltd (trading as Chevron Equipment Finance).
Chevron is a Queensland-based company that arranges finance for commercial equipment including trucks, trailers, earthmoving equipment, cranes, buses, medical and manufacturing equipment.
The transaction, which completed on Friday (1 July 2022), was for a cash consideration of $7.0 million.
Sixty per cent of this ($4.2 million) was funded by QPF through external borrowings while the balance was funded by a $2.8 million capital raising.
COG and other QPF minority shareholders have contributed capital pro rata to their existing shareholding and consequently the ownership interest of each QPF shareholder, post-capital raise, remains unchanged. COG has funded its subscription for shares in QPF of $1.6 million through a drawdown on its CBA debt facility.
The remaining 30 per cent of Chevron shares will remain with the company’s founder, who will continue to operate the business on a day-to-day basis for a minimum period of three years.
He has also reportedly entered into restraints.
However, there are options over the balance of Chevron shares to allow a further restructure across five years that will see QPF increase its holding to 90 per cent, with the balance of 10 per cent to be held by management.
Over this period there would be “an orderly transition of management duties and client and broker relationships”, COG said.
COG commented: “Chevron specialises in arranging asset finance for commercial clients. Its client base consists of SMEs predominantly operating in the transport and earthmoving sectors Australia wide.
“Chevron is a growing business driven by a strong sales culture and disciplines. It is highly process-driven, with industry leading inbound and outbound lead generation programs, complemented by proprietary software programs that allow the business to be highly scalable.
“These attributes will complement and add-value to both QPF and COG businesses.”
The move marked the latest acquisition by COG and its subsidiaries. Earlier this year, COG subsidiary Westlawn Finance Limited (of which it owns 75 per cent) announced it was set to acquire 100 per cent of the issued capital of peer-to-peer lender Equity-One Mortgage Fund Limited (Equity-One).
Under the proposed transaction, Westlawn will acquire 70 per cent of the issued capital in Equity-One for a cash consideration of $24 million on 1 March 2022 (subject to satisfaction of certain conditions).
According to its financial year 2021 results, brokers operating under its finance broking and aggregation companies (including Consolidated Finance Group, Platform Finance Group, Centrepoint Finance, QPF Finance Group and Linx Australia Group) settled $5.2 billion in FY21, an increase of 14 per cent on the prior year, driven by strong demand and as a result of the group’s continuing acquisitions.
It is estimated that the group now has just over 3,000 brokers in its network, making up 18 per cent market share of broker-originated asset finance.
However, the group is said to be targeting 30 per cent market share, representing net asset finance of approximately $6.5 billion – both through organic growth, as well as acquiring strategic stakes in complementary businesses.