Silk Logistics Holdings Limited.

333 Capital congratulates Silk Logistics Holdings Limited (SLH) on its initial public offering (IPO) and listing on the Australian Securities Exchange (ASX). The IPO is the most recent in a series of corporate transactions completed by SLH since the business was acquired in a management buyout in 2014, all undertaken with 333 Capital as lead financial advisor.

Background

Silk Logistics Holdings Limited is a leading Australian-owned contract logistics business that provides integrated ‘port-to-door’ solutions to some of the world’s best-known brands. Silk’s vision is to be the Australian market leader of innovative supply chain solutions through the application of smart processes and technology, by its people and across its networks.

Silk’s history extends back more than a century to two formative businesses in Victoria: Hoffmann Transport and Kagan Logistics. These businesses were consolidated into Silk Logistics Group in 2008, before being acquired by the current managing shareholders in 2014. 

Key members of the buyout team, managing Shareholders Brendan Boyd and John Sood, reinvented these two legacy businesses as a tech-enabled “asset-light, left and right of the warehouse” operation that has seen revenues quadruple under their leadership. Via a combination of strong organic growth and a series of targeted acquisitions, today Silk has a presence in Australia’s five largest capital cities, a long-standing blue-chip customer base and a team of almost 1,200 permanent and casual staff, agency supplied labour and transport contractors. In FY20, Silk generated total pro forma revenue of $258.4 million, delivering outstanding compound annual growth of 19.0% for the six-year period since the management buy-out

 

How we helped

333 Capital has acted as financial advisor to Silk Logistics Holdings since November 2015. Working with managing shareholders and other key members of Silk’s executive team, 333 Capital has helped to facilitate the strategic acquisitions that augment SLH’s strong underlying organic growth, while advising the business on the optimal capital structure required to pursue emerging opportunities.

Shareholder buyback and recapitalisation – 2016 and 2018

To fund the management buyout in 2014, a passive, private investor partnered with SLH managing shareholders. By 2016, the business was in a position to buy back these shares and 333 Capital was engaged to source a suitable new financial partner with both the investment horizon and follow-on funding capability to help realise the long-term strategic plan for the business.

Following an extensive market sounding exercise and detailed forecasting and valuation process, 333 Capital introduced Tor Investment Management, a Hong Kong-based fund manager to SLH and in 2018, Tor made an equity investment in the business that enabled the acquisition phase in Silk’s strategic plan to proceed.

Acquisitions - 2018 and 2019

As part of Silk’s growth strategy, the business targeted a range of synergistic acquisitions that would enhance Silk’s scale, skills, capability, and geographic footprint.

In 2018 and 2019, Silk acquired Container Swinglift Services (CSS), CTC Transport and Rocke Brothers.  These acquisitions in wharf cartage services have delivered an additional $90.7 million in revenue, bolstering Silk’s national service capabilities and providing organic growth opportunities through the cross-selling of end-to-end services for customers in both the Contract Logistics and Port Logistics divisions.

333 Capital advised SLH on all three acquisitions, coordinating due diligence activities, valuation and financial forecast modelling activities, deal structuring and documentation processes.

Initial Public Offering - 2021

By early 2021, the combination of consistent organic growth, acquired revenue and careful capital management over several years had placed SLH in a strong position to commence with a public listing.

333 Capital advised the managing shareholders across all aspects of the IPO, engaging and liaising with joint lead managers, financial, regulatory, tax and legal advisors across multiple workstreams. As a member of the Due Diligence Committee, the team oversaw the preparation of SLH’s financial forecast and capital structure modelling and in conjunction with other key advisors, the preparation and verification of the Prospectus and associated marketing materials. 333 Capital also helped to facilitate legal, financial and tax due diligence activities, leading to the preparation of the Investigating Accountant’s Report and other key deliverables.

Result

The IPO and subsequent listing of SLH represents an inflection point for the business, validating the strategic plan that its managing shareholders put into place in 2014, while providing access to capital that will help to drive the next phase in Silk’s growth.

SLH will list on the ASX with a market capitalisation of more than $150 million, on forecast FY21 revenue of $316 million. The Offer attracted strong interest from both institutional and retail investors throughout Australia -  a testament to the hard work and focus that the entire SLH team have applied to the business since 2014.

333 Capital is proud to have played a part in SLH’s growth. We wish Brendan, John and the rest of the SLH team the very best in their future endeavours.