Transaction Capital sits on funds in excess of R1 billion

TRANSACTION Capital said yesterday that its funding requirements for 2019 had been secured and it had excess capital of more than R1 billion.

In November last year the South African National Taxi Council (Santaco) acquired a quarter of SA Taxi, a division of Transaction Capital, through a transaction that will see it subscribe to almost R2bn worth of shares in the financial services provider at no cost to members.

The transaction would see Santaco acquiring R1.7bn worth of new shares in SA Taxi, with R1.2bn funded jointly by Standard Bank and Futuregrowth Asset Management, an Old Mutual subsidiary, and the remainder facilitated through vendor funding.

In the trading update to the markets yesterday, Transaction Capital chief executive David Hurwitz said SA Taxi’s strong balance sheet subsequent to the Santaco transaction, coupled with the group’s high-quality earnings growth supported by high cash conversion rates, positioned the group to maintain its dividend policy and further improve pay-out rates in the medium term.

“The group’s balance sheet remains well capitalised, liquid and ungeared, with funding requirements for the 2019 financial year already secured and excess capital of more than R1bn. Our growth expectations assume no accretive investment of the group’s excess capital, making further upside possible in the medium term,” Hurwitz said. Transaction Capital operates two divisions: the SA Taxi and Transaction Capital Risk Services.

The group said significant economic headwinds in South Africa in the past few years persisted into this year. “Despite these conditions, our entrepreneurial management teams’ unrelenting investment in innovative strategies, to further diversify and expand divisional earnings, supported a strong operational and financial performance in the first quarter of the 2019 financial year,” Hurwitz said.