How COG’s $20M Raise Fuels Bigger Stake in Fleet Network
COG Financial Services has increased its ownership in Fleet Network to over 92% through a $23.9 million acquisition, funded by a $20 million equity placement. This move is expected to enhance earnings and maintain a robust balance sheet heading into FY25.
- Acquisition of additional 14.1% stake in Fleet Network
- Total ownership rises to approximately 92.4%
- $23.9 million consideration at 6.1x FY25 EBITDA multiple
- $20 million equity placement at $2.00 per share
- Transaction expected to be 5.1% accretive to FY25 earnings
Strategic Acquisition Strengthens COG’s Market Position
COG Financial Services Limited (ASX, COG) has announced a significant step in consolidating its presence in the salary packaging and novated leasing sector by acquiring an additional 14.1% stake in its subsidiary, Fleet Network Pty Ltd. This acquisition lifts COG’s ownership to approximately 92.4%, with the remaining 7.6% held by Fleet Network’s management team.
The transaction, valued at $23.9 million, reflects a multiple of about 6.1 times Fleet Network’s projected EBITDA for the fiscal year 2025. Importantly, this deal is expected to add roughly 5.1% to COG’s statutory earnings per share, signaling a positive impact on shareholder value.
Funding Through Equity Placement and Strong Liquidity
To finance the acquisition, COG successfully completed a $20 million equity placement, issuing 10 million new shares at $2.00 each; a slight discount to recent trading prices but well within market norms for such transactions. This capital raise, combined with existing liquidity of $4.7 million, ensures the company maintains a strong balance sheet with net debt to EBITDA below 1.0x and approximately $5 million in available liquidity post-transaction.
COG’s CEO Andrew Bennett highlighted the robust investor support for the placement, emphasizing the company’s disciplined acquisition strategy that balances growth with risk management. He noted that alongside the recent EasiFleet acquisition, this transaction contributes to a 22% uplift in pro-forma FY25 earnings per share and adds $9.6 million in EBITDA, reinforcing COG’s organic and inorganic growth trajectory.
Contingent Deferred Consideration and Regulatory Dependencies
The deal includes a deferred consideration component of up to $4.7 million, payable between June 2028 and December 2030. This payment is contingent on the extension of the Fringe Benefits Tax (FBT) exemption for electric vehicles, a regulatory factor that introduces some uncertainty but aligns with broader industry trends toward sustainable transport solutions.
With the acquisition effective from 1 October 2025 and expected to complete by the end of the month, COG is positioning itself to capitalize on the growing demand for salary packaging and novated leasing services, particularly as electric vehicle adoption accelerates.
Looking Ahead
As COG integrates this increased stake in Fleet Network, market watchers will be keen to observe how the company leverages its enhanced scale and operational synergies. The successful capital raise and disciplined acquisition approach underscore COG’s commitment to sustainable growth while maintaining financial prudence.
Bottom Line?
COG’s strategic acquisition and capital raise set the stage for stronger earnings growth, but regulatory shifts on FBT exemptions will be key to watch.
Questions in the middle?
- Will the FBT exemption for electric vehicles be extended to trigger deferred payments?
- How will the increased ownership influence Fleet Network’s operational strategy?
- What impact will the equity placement have on COG’s share price and investor sentiment?
