The Smartgroup Corporation Ltd (ASX: SIQ) share price is suffering today, down 7% following an announcement.
About Smartgroup
Smartgroup is a salary packaging business that was set up in 1999 as ‘Smartsalary’. After many acquisitions, it now operates fleet management and a range of other employee management services.
Today’s Announcement
In a media release, 25% shareholder Smart Packages Pte Ltd has sold its entire shareholding, a whopping 32 million shares worth around $370 million.
The Malaysian group has been a long-term investor in Smartgroup, having acquired shares in Smartgroup in 2012 when the company was in the early stages of growth.
The sale was fully underwritten by investment bank Macquarie Group Ltd (ASX: MQG), who yesterday, according to the AFR, was asking for bids at $11.30 per share. The Smartgroup share price closed at $12.10 yesterday, so this represents a 6.6% discount to that closing price.
Earlier this week, Smartgroup provided an investor presentation at the Citi Investment Conference. At the event, Managing Director and CEO Deven Billimoria highlighted that Smartgroup’s novated leasing volumes have continued to grow, despite the 9% previous corresponding period downturn in private new vehicle sales.
Today’s announcement seems to have rubbed off on novated leasing and salary packaging company McMillan Shakespeare Limited (ASX:MMS), with its shares down 3.5%.
Should Investors Be Worried Or Should They Buy?
A sale of shares like this does not fundamentally affect the company’s operations and certainly does not impact on the industry it operates in. If you believe in the business and the industry, then this may have created a buying opportunity.
However, investors do view with suspicion large share sell downs like this one. More recently, the founding family of Reliance Worldwide Corporation Ltd (ASX:RWC) exited their entire shareholding, which unnerved many investors.
If the share sale has unnerved you and you want to steer clear of Smartgroup for now, you could consider one of the shares in the free report below.
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At the time of writing, David owns shares in Reliance Worldwide.