Moldovan automotive services company poised to push Eastern European
emerging markets sector.
Global Auto-trade Group PLC (GATG) Moldova’s only end-to-end automotive services company, is set to trade in three European markets after its prospectus was formally approved.
GATG intends to be the first Moldovan company to list on an international exchange, helping pave the way for the country’s emerging economy to take its place on world financial stage.
Moldova is centrally located in Eastern Europe between Romania and Ukraine, navigating the support of both the European Union and Russia.
The latest MSCI Emerging Markets (EM) Eastern Europe Index has shown a net return of 14.98 per cent year-to-date, eclipsing the broader EM Index (including China, Asia, India and South Africa) which returned 5.71 per cent during the same period.
GATG had planned to upgrade from a multilateral trading facility to the regulated market segment of the GXG Markets, however had to take alternative steps when the GXG suddenly and unexpectedly closed.
Despite this setback, GATG has successfully completed a prospectus approval process with the Danish Financial Supervisory Authority (FSA), and is now authorised to publically offer its shares in the UK, Germany and Denmark.
The Partners from Ukraine of international mergers and acquisitions company NBB M&A Advisors are the primary deal advisors and facilitators of the pre-IPO works.
GATG Chairman, Konstantin Chebashev, said that whilst 2015 provided a number of challenges, the underlying strength of the company once again demonstrated the robustness of its business model and provided the foundations for future growth in the emerging Eastern European market.
“The results for 2014/2015 financial period show GATG is in a strong operational and market position for an impetuous growth of business in Moldova,” Mr Chebashev said.
“The last market capitalisation before the closure of the GXG Markets saw GATG trade at €12.17m in value.
“The Company has been profitable on an earnings basis, having achieved a positive EBITDA.
“We have also strengthened our brands Auto Prezent and Mega as well as loyalty of client base through an expanded marketing programme and new service offerings.
“These are all positives for the business and proof that our strategy of growth and capital raising through IPO and an international listing is the best way to build the company.”
While GATG managed to maintain its operational output, it has also streamlined a number of its financial and administrative functions while taking advantage of new business opportunities.
These include launch of production line, expanding business relationships and signing new agreements with distributors and manufacturers and acquiring a wider range of heavy goods, utility and passenger transport vehicles through companies such as MAZ-Kupava, GAZ, PAZ, ISUZU and Multione, increasing its product range and offering new services that will improve turnover and cash flow.
GATG has also launched a new service of commercial leasing of specialised vehicles in cooperation with Belarusian leasing company Promagroleasing, which will provide extra revenue streams through government programs, export financial leasing, leasing on commercial terms, import leasing, and leasing for small and medium enterprises.
The completion of the CKD production line pilot program to fulfil government orders for the assembly of tip trucks, multi-function vehicles and new sewer jetting and flushing trucks, a unique service in Moldova, has also paved the way for a feasibility study for further assembly production of specialised equipment by 2020.
The production facility, a wholly owned business of GATG, is unique to the Moldovan market as there is currently no other national competitor that assembles specialised utility vehicles.
GATG’s Chief Executive Officer, Igor Popa, said that the increase in the company’s operating capacity, well-known brands Mega and Auto Prezent, as well as client loyalty and the improved financial performance are just a tip of the iceberg of achievements in the last reporting period.
“GATG has been able to continue our primary growth strategy and to fulfill our financial obligations without the need to attract external investments for business development,” Mr Popa said.
“During 2015 we demonstrated our ability to reduce previous periods’ losses, which were incurred due to revaluation of the real estate assets in 2012 and the effect of currency fluctuations between 2012 and 2014.
“We have also negotiated a dramatic reduction of our interest rate in order to reflect the current generally lower bank lending and refinancing rates. This will also enable the company to free up more working capital, which will be directed into operational growth.
“The effect of these measures through prudent and strategic corporate and financial restructuring will be seen in the short-term period.”
GATG has identified the positive trends that will directly impact the business to include a growing demand for car-related services in Moldova, the market’s sales margins for vehicles and auto components is three times higher than those of other European countries, growth of consumer purchasing ability, an internal automotive market volume of over €100 million, competetive distributors’ lack of working capital creating an open consumer demand on the automotive market, all providing GATG with a positive outlook for financial results in the forthcoming periods.
The company has also continued to actively participate in all government automotive tenders alongside key market players and engaged in vigorous marketing activity by participating in key local and international exhibitions, business and industry events, seminars, forums, round-tables, as well as marketing support of its main subsidiary’s online presence.
Mr Chebashev said that obtaining of publicly-traded status would help the company to further raise its profile outside Moldova.
“Our listing strategy will protect investors’ interests and ensure transparent business management. In order to meet international requirements, in 2015 we successfully fulfilled an additional expertise of due diligence” – Mr Chebashev said.
“We continue to implement a transparent, effective, entrepreneurial and prudent management structure that can deliver the long-term success of the company. We intend to then be able to adopt the structure of the UK Corporate Governance Code at the time of our re-listing.
“Approved Prospectus by Danish FSA (Financial Service Authority) for capital placement pre-IPO with and then obtaining trading status on one of the European stock exchanges will enable GATG to have access to an international capital market providing a plethora of new pathways for business development”, – said Anna Reznichenko, NBB Partner, www.nbbadvisors.com.
Mr Chebashev added “An investment in GATG does not mean participating in a risky start-up project, but rather joining one of the leading businesses and key market players of Moldova – entrance to the emerging Eastern European market.”
GATG has been operating for over 20 years and has proven its ability to successfully adapt and survive in changing and challenging markets.
It employs 134 people, serving over 22,000 clients through its network of nine branches across Moldova.
The Trade Centre Mega, GATG’s flagship store, is the largest automotive retail and service centre in the country offering a full range of services to car owners in the capital Chisinau.
The centre is located on 1.4 ha of land of which it occupies 0.4 ha with over 11,000 sqm of floor and trading space.
The company aims to raise equity or/and debt investments of €5 million for the replenishment of working assets.
The prospectus relates to an initial public offering of 1,666,667 new shares at a price per share of €3.0.
The offering period closes on 3rd December 2016.
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Global Auto-trade Group PLC
The Directors of the Company accept responsibility for this announcement.
Media Release was produced by GATG PLC in cooperation with NBB M&A Advisors / Financier Advisers Ltd