Investment Matters

Company news: Emeco

Following last week's positive quarterly update, Emeco announced the acquisition of Force - an Australian equipment rental and maintenance business - for $69.8m.  Force has operations in Queensland and WA (where Emeco has a smaller presence currently).  The acquisition will add a further 179 pieces of high quality (low hours) machines, to take Emeco’s fleet to 897 pieces.  Emeco paid an EV / operating EBITDA of 2.96x, which is a favourable multiple. 

To fund the acquisition, Emeco conducted an equity raising (rights issue).  For most clients, we elected not to participate.  This is because we are looking to reduce the portfolio weight of Emeco in the equity portfolios of most clients, not increase it, as it has increased markedly this year because of the strong share price performance.

The acquisition and raising were well received by the market, with Emeco's share price increasing 14.4% when it commenced trading after the announcement and institutional raising.