Johns Lyng expands property services portfolio after $65m raise
Summary
Earn outs for both acquisitions are payable in cash or shares, Johns Lyng said.The company intends to on-sell around 10 per cent in Smoke Alarms equity to senior management, while Linkfire management will retain 30 per cent of the business.Tony Waters, founder and portfolio manager at QVG Capital, said Johns Lyng was well-placed to extract value out of the acquisitions because both purchases overlap with its strata management business and its agency building space, which services building insurance.If they can continue to grow the business at the rate they have grown historically, then this valuation is relatively attractive, Mr Waters said.JPMorgan underwrote the $65 million equity placement and was responsible for syndicating the share sale to institutional investors. The deal priced at $5.15 a share as investors lapped up the offering.Raising equity capital is not ideal given [Johns Lyngs] recent devalue in price, but keep in mind this capital gives a buffer for more M & A, Mr Waters said.Johns Lyng stock was halted from trading while the order book was built. The outcome of the deal will be revealed on Thursday.Valued at about $1.4 billion, Johns Lyngs expansion adds features such as pest control and locksmith services to its arsenal, which the company expects will provide recurring revenue to its overall business. Ancillary property services tap into Johns Lyngs clients at the homeowner, insurer, property manager and strata manager levels, the company said.It is not the first time Johns Lyng has dipped into home services.In 2012, the company launched Your Caretaker, a concierge-styled offering for clients, which became a joint venture with the Royal Automobile Club of Victoria. The property services company sold its 49 per cent stake in the JV to RACV in 2018.