Eqstra Fleet Management Case Study: Eqstra Fleet Management

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4.1. Background Eqstra Fleet Management (EFM) was established in 1984, by Hertz Car Rental and the business has been in operation for 31 years; known first as PCL then IFS and finally EFM post 2008. Prior to its listing on the JSE on May 12, 2008, the EG was the “Leasing and Capital Equipment Division” of Imperial Holdings, a large South African-based conglomerate. The immediate short term impact on the cost of funds given the EG’s move from the Imperial group’s treasury to predominantly bank funding, was significant and especially impacted EFM, as a business operating in the competitive SA OPR market. The 2008 global financial crisis further compounded the situation, leading to capital constraints for the newly listed EG and was a contributing factor to the EG’s financial performance as shown in Figure 1 below highlighting the EG’s Net Profit before Tax performance both prior to, and post listing: 4.1.1.1. Eqstra Group NPBT (R) Figure 1 The EG’s credit rating was downgraded, in a review in March 2010, and Eqstra now holds a 'zaBBB/zaA-2 ' rating. This put significant pressure on the EG’s overall cost of debt and negatively impacted EFM’s already squeezed interest margins. 4.2. Current Operating Environment in Context 4.2.1. Fleet Management Industry The South African fleet management market which includes the provision of fleet finance and supporting fleet management services including vehicle telematics, displays oligopoly characteristics; being dominated by

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