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Sydney, Nov 29, 2007 AEST (ABN Newswire) - Greencap Limited (ASX: GCG) has been created through the acquisition of a series of privately held businesses that are involved in risk management services with a clear bias to the environment. Each of the businesses acquired boast a blue chip client base serviced by a highly technical workforce, are high growth and require little in the way of capital for expansion.
The businesses do have some commonality which can be exploited to enhance revenue growth that may not have been possible if the entities remained separate. Those common points are:- blue chip clients, highly technical staff, knowledge that is transferable, extensive web based capabilities and up to now a lack of a national presence of each entity. If GCG is successful then revenue growth will be enhanced, the business model will appeal to other vendors of similar businesses and a public market re-rating will become more readily justified.
Further acquisitions are being pursued which will most likely be satisfied through a mix of cash and scrip. While also likely to be earnings per share accretive, further equity raisings are likely. GCG is trading on an FY08 PE of 9.6 times, is likely to offer a reasonable dividend and should emerge as a high growth risk management and environmental business.
Disclosure: The author, Patersons Securities Limited, acted as Lead Manager and Underwriter to the Public Offer that raised $15m at $0.20 for Greencap in July 2007. It received a fee for this service.
