Diversified non-bank lender Financial Resources Limited has expanded its operations by completing its latest acquisition, taking a 75 per cent stake in national lending business Quik Rent.
Diversified non-bank lender Financial Resources Limited has expanded its operations by completing its latest acquisition, taking a 75 per cent stake in national lending business Quik Rent.
The part-purchase builds on the recent buyout of financial services joint venture partner Aspen Group and comes as the group’s mining contracting division enters its largest contract to date.
Expected to give Financial Resources added exposure to about 1,500 additional Australian retail equipment lending contracts a month by mid-next year, the majority stake in Quik Rent is also predicted to generate revenue from branded Visa Card accounts through a contract currently subject to negotiation.
FRL managing director Barry Samuels was unable to reveal the purchase price because of due diligence obligations, but Cygnet Capital analyst Ian Yaretsky told WA Business News it would likely require a financing commitment of between $15 million and $20 million over the next year.
From relatively humble beginnings in 1994 the company has slipped largely under the radar of investors.
FRL made its debut on the Australian Stock Exchange in August 2003 through WA-based listed entity Transact, which acquired the business and re-listed as FRL, raising $1.53 million at an issue price of 20 cents a share.
Since then, investors have been less than enthusiastic about FRL, Mr Samuels admits, as evidenced in its share price performance.
According to Cygnet Capital, the volume-weighted average share price of FRL since listing has been 18.03 cents, despite growing dividends to shareholders.
But Mr Samuels, a former career bank manager, appears unfazed by the lack of investor interest, preferring to focus on the day-to-day running of the business, and, it seems, expanding the group’s growing web of subsidiaries.
“I’m of the belief that if you focus on the fundamentals, the share price will take care of itself,” Mr Samuels told WA Business News.
Adding considerable financial clout to its board, in 2003 FRL pulled off a recruiting coup when it gained the services of former 13-year Town and Country Bank managing director Ray Turner as chairman.
But the shining light for FRL recently has been its mining business, which now provides around a third of revenues.
Starting with the acquisition of Kalgoorlie-based mining contractor Alljay just more than 18 months ago, the group continues to win work.
Its largest deal to date is an earthworks contract with St Ives Gold Mining Company, worth up to $7 million annually.
FRL’s latest contract with Roche Mining is worth up to $800,000 a year.
