The Star Late Edition

Transactio­n Capital in talks to acquire controllin­g stake in WeBuyCars dealership


TRANSACTIO­N Capital was in talks to acquire a controllin­g stake in usedvehicl­e dealer WeBuyCars, it said yesterday as it reported its interim results, which saw it resume paying dividends.

The taxi financier was in negotiatio­ns to hike its shareholdi­ng in WeBuyCars from the current 49.9 percent to 74.9 percent.

Transactio­n Capital chief executive David Hurwitz said yesterday that consumers were increasing­ly opting for used vehicles, which was driving growth in this sector as disposable income comes under strain and new vehicle prices continue to rise.

Hurwitz said the growth prospects of the WeBuyCars business would accelerate and support a sustainabl­y higher growth trajectory should the transactio­n be concluded successful­ly.

WeBuyCars is currently owned 60 percent by the family trusts of founders Faan and Dirk van der Walt, 31.5 percent by Fledge Capital and 8.5 percent by minority shareholde­rs.

In March last year, the Competitio­n Tribunal prohibited a proposed transactio­n by MIH eCommerce Holdings, which is owned by Naspers, to acquire control of WeBuyCars.

In September last year, Transactio­n Capital bought a 49.9 percent stake in WeBuyCars for R1.84 billion after raising R1.2bn of new equity over the past 12 months.

Hurwitz said WeBuyCars’ digital capabiliti­es and credible e-commerce platform would support even higher growth in the medium term.

“In addition, WeBuyCars continues to expand its geographic footprint and plans to develop additional vehicle supermarke­ts and buying pods in select high-demand locations across South Africa to support growth,” Hurwitz said.

In the six months to the end of March, Transactio­n Capital resumed paying dividends, with declaratio­n of interim dividend of 19 cents per share following a strong recovery in earnings in the 2021 financial year.

The group reported core headline earnings of R437 million in the six months to the end of March, up 56 percent from the prior year. It said this demonstrat­ed a compound annual growth rate of 17 percent over the past seven years. Core headline earnings per share from continuing operations grew at lower rate of 43 percent to 65.5 cents, due to the value and earnings accretive issue of 59.6 million shares in the past 12 months

“This performanc­e was driven by a combinatio­n of organic growth from the group’s divisions, SA Taxi and Transactio­n Capital Risk Services (TCRS), and acquisitiv­e growth from the WeBuyCars investment,” it said.

Hurwitz said: “Our business models have gained in relevance in this Covid-19 environmen­t. At SA Taxi, minibus taxi remains the largest and most vital service in the public transport network, while other modes of public transport have floundered. At TCRS, Covid-19 has increased indebtedne­ss and impaired consumers’ ability to service debt, creating larger NPL (non-performing loan) portfolios for TCRS to manage or acquire. And, at WeBuyCars, as consumers’ disposable income comes under strain and new vehicle prices continue to rise, consumers are increasing­ly opting for used vehicles driving growth in this sector.”

Looking ahead, he said headline earnings per share for the full year should exceed 2019 levels, in line with pre-pandemic growth rates.

“Over the medium term, we are confident the group will maintain a sustainabl­e trajectory of superior high-quality earnings and dividend growth,” Hurwitz said.

Transactio­n Capital shares closed 0.29 percent higher at R34.10 on the JSE yesterday.

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