Steadfast Group Limited · ASX:SDF
Steadfast — Investor Presentation (November 2023)
43 slides from Steadfast's investor presentation, Nov 16, 2023
Slide 1: Acquisition of Sure Insurance, FY24 trading update and equity raising
Steadfast Group Acquisition of Sure Insurance, FY24 trading update and equity raising Investor Presentation 2023 16 November
Slide 2: Important notice and disclaimers
Important notice and disclaimers Important Notice and Disclaimer IMPORTANT: You are advised to read the following carefully before making any use of the information contained in this presentation. This presentation has been prepared by Steadfast Group Limited (ABN 98 073 659 677) (Steadfast or the C
Slide 3: Important notice and disclaimers
Important notice and disclaimers No representation or warranty, express or implied, is made as to the fairness, accuracy, adequacy, completeness, correctness or reliability of any statements, estimates, opinions, conclusions or other information contained in this presentation. To the maximum extent
Slide 4: Important notice and disclaimers
Important notice and disclaimers Market data Certain market and industry data used in this presentation may have been obtained from research, surveys or studies conducted by third parties, including industry or general publications. Neither Steadfast nor its representatives or its advisers have inde
Slide 5: Table of contents
Table of contents Acquisition of Sure 06 FY24 trading update Insurance, FY24 trading update and equity 11 Acquisition of Sure Insurance raising - 20 Equity raising Investor Presentation 27 Appendices 5
Slide 6: FY24 trading update
FY24 trading update 6
Slide 7: Continued strong operating and financial track record since listing on ASX
Continued strong operating and financial track record since listing on ASX1 Steadfast Group Steadfast Network GWP ($b) Steadfast Underwriting Agencies GWP ($b) Underlying EBITA ($m) 2.0 400 12 10 1.5 300 8 200 6 1.0 4 100 0.5 2 0 0.0 0 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY14 FY15 FY16
Slide 8: Strong start to FY24
Strong start to FY24 FY24 trading update Steadfast’s strong start to FY24 has continued in October with a solid first four months of trading, and premium increases from insurers ahead of original assumptions FY24 acquisition program expected to meet or exceed $280 million target (excluding Sure
Slide 9: Acquisition pipeline
Acquisition pipeline Targeting $280 million of acquisitions in FY24, excluding Sure Insurance Current pipeline Estimated Estimated Annualised Acquisition cost EBITA 18 completed acquisitions (including ISU Group and step ups) $16.2m $165.0m 15 term sheets signed and due diligence commenced $4.9m $45
Slide 10: Steadfast's acquisition track record
Steadfast’s acquisition track record Steadfast has a proven track record of successfully completing earnings accretive acquisitions Steadfast’s FY24 guidance includes completing $280 million of acquisitions, excluding Sure Insurance FY24 year to date Steadfast has completed $165 million of acqui
Slide 11: Acquisition of Sure Insurance
Acquisition of Sure Insurance 11
Slide 12: Overview of Sure Insurance ("Sure")
Overview of Sure Insurance (“Sure”) Scalable, highly efficient, data driven operating model, delivering excellence in claims management and customer experience Operating from 2019, Sure is a rapidly growing underwriting agency of home and contents insurance in Regional Queensland 100% Regional Q
Slide 13: Sure Insurance historical and forecast financial performance
Sure Insurance historical and forecast1 financial performance Sure has recorded strong revenue growth and operating leverage historically GWP ($m) EBITA ($m)2 200 45 40 160 35 30 120 25 20 80 15 10 40 5 0 0 FY21 FY22 FY23 FY24f FY25f FY21 FY22 FY23 FY24f FY25f Total Revenue ($m) EBITA Margin (%) 70
Slide 14: Sure's competitive advantage
Sure’s competitive advantage Sure Insurance combines extensive regional and product expertise with a data-driven technology platform to deliver excellent outcomes for customers and insurance partners For customers FY23 proof points Customisable policies for the region to Net Promoter Score +46 t
Slide 15: Highly attractive and growing market
Highly attractive and growing market Queensland insurance is a large and growing market, underpinned by strong demographic tailwinds Queensland regional insurance market Regional Queensland home and contents insurance market size Regional Queensland is a large and growing market with Sure over 556
Slide 16: Sure Insurance acquisition summary
Sure Insurance acquisition summary Sure is a leading specialist insurance provider, focused on delivering property cover to Regional Queensland Strategic alignment of Sure Insurance acquisition Acquisition of Sure Insurance summary Highly successful business with excellent historical growth, under
Slide 17: Sure Insurance acquisition summary cont.
Sure Insurance acquisition summary cont. Potential earn-out payments based on Sure management forecasts Upfront payment (average FY23 & FY24) FY24 FY25 EBITA ($m) 20.6 24.5 38.7 Multiple 10.33x 10.33x 10.33x Enterprise value ($m) 212.5 253.6 400.0 % acquired 70% 70% 70% Purchase price ($m) 148.8 177
Slide 18: Benefits to Steadfast Group
Benefits to Steadfast Group Enhancing Steadfast’s earnings growth profile Acquisition strengthens and diversifies Steadfast’s position as the leading underwriting agency offering in Australasia Sure has an increasing market share in the growing Regional Queensland market further adding to existi
Slide 19: Steadfast Underwriting Agencies
Steadfast Underwriting Agencies Sure Insurance adds to Steadfast’s existing underwriting agency offering that now spans across 30 agencies, providing over 100 niche products Solutions for novated Complete farm package Caravans, campervans, Commercial and Accident and health Residential and commercia
Slide 20: Equity raising
Equity raising 20
Slide 21: Equity raising – Placement and SPP overview
Equity raising – Placement and SPP overview Placement offer • Fully underwritten institutional placement to raise approximately $280 million (“Placement”) structure and size • The final Placement issue price (“Issue Price”) is expected to be announced to ASX on Friday, 17 November 2023 prior to resu
Slide 22: Sources and uses
Sources and uses Fully underwritten Institutional Placement to raise $280 million Source of funds Fully underwritten Institutional Placement1 $280.0m Total $280.0m Use of funds Upfront acquisition payment for Sure Insurance $148.8m FY24 incremental earn-out payment for Sure Insurance $28.8m Cash for
Slide 23: Pro-forma gearing and debt capacity
Pro-forma gearing and debt capacity Post equity raise and following the Sure Insurance acquisition, total funding capacity to fund acquisitions and / or earn-outs of $291m Pro-forma post acquisitions 15 Nov 2023 Sure Insurance funded by $ million 30 June 23 (unaudited) initial payment Equity raising
Slide 24: Sure acquisition is expected to add incremental earnings accretion
Sure acquisition is expected to add incremental earnings accretion Acquisition of Sure and equity raise is estimated to provide c.1% EPS accretion in the first full year FY24 estimated earnings Annualised estimated earnings contribution contribution Sure EBITA 14.9 24.5 Sure NPAT attributable to Ste
Slide 25: FY24 guidance upgraded
FY24 guidance upgraded Steadfast FY24 guidance upgraded to reflect current positive trading results, the Sure acquisition and equity raise Previous FY24 Upgraded FY24 guidance The guidance is subject to: guidance range range ⁻ Insurers to maintain current premium rate increases Underlying EBITA $5
Slide 26: Equity raising – timetable
Equity raising – timetable1 Event raising – timetable1 Equity Date1 Wednesday, 15 November 2023 Record date for SPP (7.00pm) Trading halt and announcement of the Placement Thursday, 16 November 2023 Placement bookbuild Thursday, 16 November 2023 Announcement of the outcome of the Placement Friday, 1
Slide 27: Appendix
Appendix 27
Slide 28: Key risks and international offer restrictions
Key risks and international offer restrictions 28
Slide 29: Key risks
Key risks 1. INTRODUCTION The future performance of Steadfast and the future investment performance of the Steadfast shares (before and after the Sure Insurance Acquisition) may be influenced by a range of factors, many of which are outside the control of Steadfast and its directors. A non-exhaustiv
Slide 30: Key risks continued
Key risks continued Reliance on strategic partners Steadfast is continually adding new strategic partners and attempts to maintain and strengthen relationships with strategic partners, many of which are longstanding. If, however, strategic partners are lost and not replaced within an appropriate tim
Slide 31: Key risks continued
Key risks continued Loss of capacity for underwriting agencies Unexpected loss of underwriter capacity, whereby an underwriter fails to renew a binder or withdraws capacity for strategic reasons (such as exiting lines of business or a specific country exit) is likely to result in significant loss of
Slide 32: Key risks continued
Key risks continued Technology and cyber security risk Steadfast faces risks relating to failure of critical technology assets, infrastructure and services and the risk of loss from theft or unauthorised access to systems including the compromise of an IT asset’s confidentiality, integrity or availa
Slide 33: Key risks continued
Key risks continued Ongoing Disputes Steadfast may from time to time be involved in legal, regulatory and other proceedings and disputes arising from its businesses. These may cause Steadfast to incur significant costs, delays and other disruptions to its business and operations. In particular, PSC
Slide 34: Key risks continued
Key risks continued ⁻ The transaction document in relation to the Sure Insurance acquisition is materially amended or varied, or a condition precedent is waived without the consent of the underwriters, terminated, breached in material respect, ceases to have effect, otherwise than in accordance with
Slide 35: Key risks continued
Key risks continued Market price of Steadfast shares will fluctuate The market price of Steadfast shares on the ASX may rise or fall due to numerous factors, including: • Australian and international general economic conditions, including inflation rates, the level of economic activity, interest rat
Slide 36: Key risks continued
Key risks continued Steadfast also relies on access to debt financing. The ability to secure financing, or financing on acceptable terms, may be affected by volatility in the financial markets, globally or within a particular geographic region, industry or economic sector. In recent years, global cr
Slide 37: Key risks continued
Key risks continued Limitations on contractual protection Limited contractual representations and warranties have been obtained. Completion Risk If the Sure Insurance Acquisition does not proceed and funds have been raised via the Placement and/or SPP, Steadfast intends to use the Placement and/or S
Slide 38: Acquisition Terms
Acquisition Terms Share Purchase Agreement Completion Conditions Conditions to the completion of the purchase of the initial 70% acquisition include: • change of control consents being obtained for the property leases, • execution of employment agreements with the founders on terms that are no worse
Slide 39: International offer restrictions
International offer restrictions International Offer Restrictions This document does not constitute an offer of new ordinary shares (New Shares) of the Company in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New Shares may
Slide 40: International offer restrictions
International offer restrictions Hong Kong (continued) No advertisement, invitation or document relating to the New Shares has been or will be issued, or has been or will be in the possession of any person for the purpose of issue, in Hong Kong or elsewhere that is directed at, or the contents of wh
Slide 41: International offer restrictions
International offer restrictions Switzerland (continued) Neither this document nor any other offering or marketing material relating to the New Shares may be publicly distributed or otherwise made publicly available in Switzerland. The New Shares will only be offered to investors who qualify as "pro
Slide 42: Questions
Questions 42
Slide 43: Steadfast
<$> Steadfast THE STRENGTH YOU NEED
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