Scout Security Ltd has announced a strategic partnership and raised AU$2.3 million (40% premium to the 30-day volume weighted average price (VWAP)) with multinational security company Prosegur Compañía de Seguridad, S.A (BMAD: PSG, ‘Prosegur’). Highlights of the announcement include the following.
- Strategic equity investment from Prosegur of up to AU$7.25 million via two tranches, with AU$2.3 million raised immediately.
- Placement completed at a 40% premium to the 30-day VWAP.
- Proposed strategic partnership to see Prosegur distribute Scout’s full suite of branded security products into key Prosegur markets.
- Strategic partnership allows Prosegur to expand from traditional and commercial security systems into the large and ever-growing DIY security market.
Who is Prosequr?: Prosegur is a global leader in security services, with more than 175,000 employees and a market capitalisation of €2.75 billion (AU$4.29 billion). Currently, Prosegur’s alarms segment generates more than €250 million (AU$391 million) in annual revenue from more than 500,000 alarm connections in 11 countries, including Spain, Portugal, Argentina, Peru and Chile.
Analyst comments: a premium placement in any market is an excellent achievement, to do so in the current environment is almost unheard of and again highlights the long term potential of Scout. Whilst the placement obviously gives Scout a needed cash injection, we believe the potential partnership between the groups has significant long term mutual benefits, as it allows Prosegur to expand from traditional and commercial security systems into the large and growing DIY security market, whilst Scout has expand into a markets which it had no presence
a premium placement in any market is an excellent achievement, in the current financial environment is almost unheard of. This again highlights Scout’s potential. Obviously, the placement gives the company a welcome cash injection, but we believe the partnership will also be mutually beneficial longer term, given that Prosegur can expand from its traditional and commercial security systems into the large and ever-growing DIY security market. Scout, meanwhile, now has a presence in markets where formerly it had none.
Billion dollar partners: Prosegur is the fourth multi-billion dollar company with which Scout has formed a working relationship, the latter having previously joined Amazon as a major shareholder. That fact alone emphasises the quality of Scout’s product offering.
Sales: We maintain our belief that Scout’s partnership with Stanley Black and Decker (SBD), which recently made its first purchase order, will have the greatest influence, both short and long term, on Scout’s future sales/revenue. Given SBD’s size and distribution reach, as well as the terms of the Scout-SBD partnership, its possible sales of Scout’s product via SBD will go way beyond what Scout has achieved to date.
While first sales are expected during the March 2019 quarter, more meaningful figures are likely to follow in the quarters that follow as the partnership ramps up.
The information in this email should not be the only trigger for your investment decision. We strongly recommend you seek professional financial advice whenever making financial investment decisions.
Valuation: we maintain our valuation of Scout at $0.94 / share (SP $0.21/share). We will review this as sales figures from the Scout/SBD partnership are released during 2019.