Commonwealth Bank declares 5% stake in Eroad through various subsidaries

The Commonwealth Bank of Australia has taken a substantial shareholding in Eroad [NZX: ERD], two months after the logistics and fleet management company floated on the NZX.

Australia's largest bank holds a 5.19 percent stake, or 3.1 million shares worth $9.54 million, in the Auckland-based company according to a substantial holding notice lodged with the NZX. The stake is split across its subsidiaries, with Colonial First State Asset Management holding 4.4 percent, while ASB Bank holds 0.8 percent.

According to the notice, the various subsidiaries bought 2.6 million shares for $3.5 million during the July bookbuild, and have since boosted their stake to above the 5 percent substantial shareholder threshold.

In mid-August, Eroad listed on the NZX, raising $40 million in new capital to fund international growth. It sold 15.3 million shares at $3 apiece, of which 70 percent was bought by institutional investors with no public pool offered. Existing owners sold 2 million shares, or $6 million worth, into the initial public offer, to keep a 75 percent stake in the company.

The shares jumped some 13 percent on its debut, to trade at $3.40, which chief executive Steven Newman told BusinessDesk at the time was due in part to strong institutional support and "latent demand" from "heavy scaling" at the bookbuild. Shares of Eroad rose 1.4 percent to $3.65 in afternoon trading today, and have gained 22 percent since listing.

Founded in 2009, Eroad says it was the first company to provide a nationwide GPS-based road user charge system. It first turned a profit - $2.9 million - in the year ended March 31, 2014, on $10 million in sales. In its July prospectus it forecast revenue to rise to $19 million in 2015, and to $34 million in 2016. But it expected to post a loss of $1 million in 2015 due to $2 million in listing costs, before returning to profit of $5.5 million in 2016. The company doesn't expect to pay dividends in the near term.

Of the new capital raised, $3 million went to repay bank debt, with the remaining cash used to fund Eroad's growth, particularly in the US, where it launched commercial services in Oregon in April. The company has said it will look at potential acquisitions to further expand and enter new markets.

(BusinessDesk)