SingPost gains FMH agreement on local business


Freight Management Holdings deal to boost local presence of CouriersPlease owner

SingPost gains FMH agreement on local business
SingPost is focusing on Australian e-commerce

 

Singapore Post’s (SingPost) logistics arm is set to pick up a 38 per cent stake in Victorian firm Freight Management Holdings (FMH) for A$85 million, SingPost tells the Singapore bourse.

In doing so, SingPost makes a statement of its intent around the Australian parcel delivery and logistics markets.

"FMH has a long-standing business relationship with the SingPost Group, having been a customer of CouriersPlease, a wholly-owned subsidiary of SingPost, for many years," SingPost notes.

In explaining the rationale for the purchase of the fourth-party logistics provider (4LP), SingPost lists three main benefits:

  • further scale its business-to-business-to-consumer (B2B2C) logistics capabilities in Australia
  • capitalise on the growing eCommerce segment in Australia
  • acquire a complementary 4PL technology platform and distribution management solution.

Once closed, FMH is to be held in a new SingPost company in this country.

 "Together with the SingPost Group’s other businesses in Australia – CouriersPlease as well as one of SingPost’s other Australian subsidiaries, Quantium Solutions Australia, an e-commerce logistics solutions provider – the SingPost Group is able to derive synergistic benefits, grow volumes and build scale," it says.

"The combination enables the SingPost Group to provide an end-to-end B2B2C logistics solution for customers serving both business-to-business (B2B) and business-to-consumer (B2C) channels, and provide a seamless logistics service within Australia and the wider Asia-Pacific region.

"This provides a strong platform for the SingPost Group to drive revenue and earnings growth, as well as further its strategic ambition in Australia over the long term."


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Damian Degenhardt, FMH’s Australian founder in 2000 and currently the majority shareholder and managing director, is to remain in place when the deal completes.

FMH is described as an "asset-light, technology-driven ‘control tower’ business. Through the use of proprietary technology including its core 4PL technology platform (OneFlo), FMH manages and executes its customers’ supply chain and distribution requirements."

This aims to match those requirements with the optimal provider.

FMH’s unaudited net profit before tax last year is put at $25 million and SingPost sees its market value at A$182-A$217 million.

SingPost also gains a call option on 13 per cent more FMH shares in an enlarged issued share capital move  that would give it 51 per cent of FMH by mid-2023.

If SingPost is unable to land the remaining shares, it plans to work with those shareholders to list the business on the Australian Securities Exchange (ASX).

The move can be seen as a vote of confidence in Australia’s parcel scene.

"Australia is one of the largest and most developed e-commerce markets in the Asia-Pacific region by gross merchandise value, and the overall Australian CEP market is estimated to be worth A$10 billion today," SingPost observes.

"Covid-19 has accelerated e-commerce adoption and is pushing retailers to adopt online sales channels more rapidly.

"Volumes continue to grow, and the CEP market is expected to benefit from these trends.

"CouriersPlease, an express parcel delivery company, has benefited from such trends and delivered improved financial performance for the SingPost Group in the current financial year."

 

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