Motor dealer Armstrong's parks IPO, blaming market conditions

Armstrong's chairman Rick Armstrong, pictured in 2017. Market turbulence has prompted the automotive group to pause its plans to list on the NZX. Photo / Matthew Hansen

One of New Zealand's largest private automotive groups has put plans for an initial public offering on hold, blaming market conditions.

At the end of January Armstrong's confirmed it was seeking to list its shares on both the NZX and ASX and as recently as the start of March, Armstrong's was reportedly conducting a pre-IPO roadshow with institutional investors, pitching itself as the only consolidator in the New Zealand market of scale.

But on Monday afternoon the company said in a statement that it was delaying the plans. It did not say when plans might be resumed, beyond saying the process was delayed "for now". Jarden and UBS would remain as joint lead managers for its IPO.

"This is a pragmatic decision to see us come to market under more stable investment conditions. It was important to the team we get this right for investors and the business. We're prepared to be patient and to continue executing on our growth agenda in the meantime," Armstrong's chief executive Troy Kennedy said, blaming "market turbulence, macro-economic conditions and geopolitical events" as being behind the decision.

"A lot of time and effort goes into a process like this, and [chairman] Rick [Armstrong] and I have genuinely appreciated the time prospective investors have spent with us to understand Armstrong's business model."

Kennedy claimed the company was still seeing strong demand, and "growth in our order book", supported by the Government's subsidies for electric vehicles.

"While we have hit pause for now, we have a number of significant strategic initiatives to progress this year. We believe the market will further consolidate in the coming years and Armstrong's intends to play a lead role during this period," Kennedy said.

"When we come back to market, we look forward to being able to engage with potential investors in person – something we had to manage virtually this time."

Founded in Christchurch in 1993, Armstrong's operates 15 dealerships in Dunedin, Christchurch, Wellington and Auckland, selling 16 global automotive brands.

The company has said it had grown to annual revenue of close to half a billion dollars, while according to the AFR prospective investors were told it expected to record turnover of almost $550m in the 2022 financial year, rising to $627m in 2023, with earnings rising from $37.5m and $45.6m across the forecast period.

Armstrong had indicated he intended to retain a majority stake in the company.