The National Bank invests tens of millions in Unimax to help expand tire retailer Boucherville and apply for equity.
Posted at 6:00 am
The exact size of the investment is not specified, but it will earn the Quebec banking institution a 30 percent stake in Unimax. This is the first time in Unimax’s history that an institutional investor will become a shareholder.
The transaction with National Bank allows Unimax to buy back 100% of the shares of Distribution Stox, a distributor of Unimax products. This process should give better purchasing power compared to tire manufacturers in addition to operational efficiencies.
A portion of the funds must also be used to acquire independent tire dealers to expand the company’s presence outside of Quebec, a fragmented market where management sees opportunities.
Unimax has made around ten acquisitions in the past five years.
With sales of around 600 million, Unimax specializes in distributing tires in the country, but also manages a network of 900 retailers that operate under a handful of brands including Point S.
Unimax has 22 warehouses across the country and serves more than 5,000 customers (independent retailers, car dealerships and online retailers).
New way to invest
The National Bank is investing in Unimax through its National Bank SME Growth Fund and a new investment vehicle. To carry out the transaction, the organization formed a group of about forty wealthy client-investors of the bank (entrepreneurs, entrepreneurial families, etc.) and set up a mini-fund in the form of a limited partnership with the aim of investing in a single company, i.e. Unimax.
National Bank executive vice president, general manager and head of private placements Luc Ménard explains that the bank saw in Unimax an opportunity to offer private placements in wealth management to its wealthy clients.
Some clients like the idea of investing in a company, he says. “There are people who like a certain sector and dislike certain others. »
However, this type of investment remains a less liquid risk product than others and is not suitable for all investors. “It’s not the same risk,” says Luc Ménard.
On the other hand, it’s a model that will gain popularity because it allows one type of client to access private placements, he adds. “It brings more depth to our service offering. »
The National Bank and its client-investors thus join a group of some sixty Unimax shareholders, mostly Quebec merchants (mechanical workshops and distributors).
This transaction comes as Unimax President and CEO Jean Novak has just succeeded Bruno Leclair, who is retiring this spring but will remain on the board.
The replacement tire market in the country is estimated at 27 million tires and Unimax’s share reaches 3 million tires, that is about 12%. “We want to increase our share. Obviously we won’t reach 50% in the next few years,” said Jean Novak in an interview.
We will take one bite at a time to increase our distribution market penetration while increasing the number of people who trust us to manage their signs and workshop.
Jean Novak, President and CEO of Unimax
Several elements feed the tire industry. The vehicle fleet is growing at 1.6% a year, even though mileage per car has fallen during the pandemic, says Jean Novak. “Commodity costs are under upward pressure and tire prices are rising due to increasing wheel diameters as manufacturers release new models. »
Long-term industry trends, particularly related to fleet electrification, are acting as growth catalysts.
“Tyre consumption was initially higher with electric vehicles because the weight of the vehicles acted on the tyres. Tire manufacturers are trying to adapt their products to the weight of electric vehicles, but also to improve smoothness,” explains Jean Novak.
“We see a great opportunity in the electrification of vehicles. Tires are becoming more and more specialized,” says Luc Ménard.
“All electric car manufacturers will want to set up a branch network. We see this as an opportunity. »