Cranes and trailers sold off by bankrupt mining contractors are proving a boon for auction group GraysOnline as it sells less consumer goods and focuses on machinery and equipment, targeting international buyers in Asia and the Middle East. Source: Australia Financial Review
“I would like Grays to be to plant and machinery what Google is to search,” chief executive Mark Bayliss said.
Australia currently has “an excess of supply” in mining and agricultural equipment, partially due to the resources slump, which forced many companies into administration, he said.
Companies whose assets have been put up for sale on Grays’ website after going into administration include Melbourne-based transport group McAleese; Queensland’s Kurtz transport group – which provided services to the mining and gas industry – as well as trucking group Heavy Haulage Australia and contractor WDS; and Western Australia’s Tasman Civil road construction group.
Grays is also now starting to receive equipment used on WA’s Gorgon project as work on the natural gas plant winds down.
Mr Bayliss, a former accountant who joined Grays in 2014 after working in private equity and a stint as Fairfax Media’s chief financial officer, wants to further boost B2B profits by selling more agricultural machinery online, pointing out most farm equipment is still sold in paddocks by “blokes with gavels”.
Grays bought Wagga Wagga-based specialist agricultural equipment auction group, DMS Davlan, for $3 million in mid-2015.
Selling equipment online attracts more buyers, increasing competitive bidding tension and leading to higher prices for sellers, Mr Bayliss said.
Prices can reach as high as several million dollars for a dump truck.
To further boost profits, Grays plans to take more financial risk.
Traditionally, it has acted as an agent for sellers, taking a commission. But it has started offering guaranteed minimum sale prices, in exchange for a higher commissions, and has teamed up with broker Magnolia Lane to provide financing for purchases to try and attract more buyers.
It is also buying assets directly from stressed companies and reselling them online. Grays tends to get better prices for assets when it sells them itself, Mr Bayliss said.
Grays already sells some equipment overseas – Mr Bayliss says there is strong demand for “yellow metal” gear such as Caterpillar tractors in countries such as Ghana and Chile as well as the Middle East and South-East Asia, while jackhammers and forklifts are sent to the Philippines.
But Mr Bayliss plans to establish auction businesses in other countries with local joint venture partners, and is in the process of setting up a Middle Eastern website.
Grays does not plan to attempt expansion in the US because there is too much competition and believes Europe is also tricky due to the broad range of insolvency laws.