Smart Parking’s US Entry Hinges on Peak Parking’s EBITDA Performance

Strategic US Market Entry

Smart Parking Limited (ASX: SPZ) has announced a binding agreement to acquire Peak Parking LP, a rapidly growing boutique parking operator in the United States. The acquisition, valued at up to USD 36 million, marks a significant milestone in Smart Parking’s long-term growth strategy by establishing a direct presence in the world’s largest parking operations market.

Peak Parking operates 134 locations across six US states, offering a diversified portfolio of parking services including garage management, valet, special events, and consulting. Since its founding in 2016, Peak Parking has demonstrated impressive growth with a compound annual revenue growth rate of 45% from 2022 to 2024, reaching USD 9.1 million in revenue and USD 3.3 million in EBITDA in 2024.

Financial Structure and Funding

The acquisition price includes an upfront payment of USD 32 million, USD 26 million in cash and USD 6 million in Smart Parking shares, with an earnout component of up to USD 4 million in shares contingent on Peak Parking achieving USD 4.5 million EBITDA in calendar year 2025. This structure aligns incentives and mitigates valuation risk, with an implied acquisition multiple of 8.0x EV/EBITDA based on the target EBITDA.

To fund the acquisition and associated costs, Smart Parking is undertaking a fully underwritten equity raising of approximately A$45 million, comprising a A$32.2 million institutional placement and a A$12.8 million pro-rata accelerated non-renounceable entitlement offer. Additionally, the company has expanded its revolving credit facility with HSBC from A$10 million to US$10 million, providing further financial flexibility.

Growth Prospects and EPS Impact

Smart Parking expects the acquisition to deliver more than 25% earnings per share accretion in FY25 on a pro forma basis, assuming analyst consensus NPAT estimates and full integration of Peak Parking’s operations. The company also anticipates leveraging its proprietary Smart Cloud technology and ANPR/LPR systems to unlock new revenue streams and improve margins across the acquired portfolio.

CEO Paul Gillespie highlighted the strategic importance of the deal, noting that Peak Parking’s established footprint and reputation provide an excellent platform for Smart Parking’s technology-driven expansion in the US market. The acquisition is expected to complete in March 2025, subject to customary conditions.

Investor Considerations and Next Steps

Shareholders are invited to participate in the equity raising, with retail entitlements opening on 24 February and closing on 7 March 2025. The placement and institutional entitlement offer have already commenced. The company remains in trading halt pending completion of these offers.

While the acquisition presents a compelling growth opportunity, investors should monitor Peak Parking’s ability to meet the EBITDA targets that underpin the earnout and valuation. The integration of technology platforms and cross-border operational challenges will also be key factors influencing the success of this expansion.