Scout24 finally looks ready to put its money where its mouth is after teasing shareholders for months with talk about a dividend payout.
“We will probably ask the supervisory board for a payout, which would come a year earlier than originally planned,” Christian Gisy, Scout24’s chief financial officer, told Handelsblatt.
Scout24’s chief executive, Greg Ellis, first raised the possibility of dividend payments over the summer. Since then, the digital classifieds group has made significant progress in reducing its leverage ratio.
Scout24 operates Germany's largest real estate and automobile classifieds websites.
Our net debt reached a point in relation to our operative earnings at which we can consider dividend payments. Christian Gisy, CFO, Scout24
The company has reduced its exposure from 50 to 13 banks, Mr. Gisy said, and has managed to save €12 million ($12.8 million) in interest for 2017 by renegotiating the conditions of its debt.
Scout24 has a syndicated loan of over €600 million and a €200 million working capital loan, for a total of €800 million.
“Our leverage ratio will probably sink to 2.5 in the first quarter of 2017,” Mr. Gisy said. “Our net debt reached a point in relation to our operative earnings at which we can consider dividend payments.”
The move would have to be approved at Scout24’s annual general meeting, which is expected to convene on June 8.
Scout24 has been steadily reducing its leverage since its stock market debut in September 2015. The company used €214 million in proceeds from its initial public offering or IPO to make an initial payment on its bank debt.
At the time of its IPO, Scout24’s two largest shareholders were the private equity company Hellman & Friedman and the world’s largest asset manager, Blackstone, which together held a 67-percent stake. Deutsche Telekom held a 29-percent stake and Scout24’s management owned a 4-percent stake.
The shareholders have gradually reduced their participation through several block trades, which put Scout24’s share price under pressure before Christmas. Seven of 10 analysts, however, still recommend buying the company’s stock, according to Bloomberg.
According to a Goldman Sachs analysis, the market for digital classified websites remains strong in Germany, the Benelux countries and Italy. The main risk comes from growing competition and possible regulatory changes.
Peter Köhler is a Handelsblatt editor in Frankfurt, reporting on banks, private equity firms, venture capital and corporate funding. To contact the author: [email protected].