Transaction Capital’s share price ramped up 6% after it announced firmed up plans to list WeBuyCars (WBC) on the JSE, and to raise about R1.5bn million before the used car sales subsidiary is unbundled from its parent.
There would also be a private placement of R500m. The unbundling and listing was anticipated for early April 2024. Transaction Capital’s share price traded at R7.97 yesterday afternoon, well down from R32.73 a year ago on the same day, with the decline in line with that of the group’s general financial performance.
Two weeks ago, the group said it was considering listing WBC as a way to help put the broader group on a better financial footing, after steep losses arose last year primarily from the SA Taxi subsidiary, which finances taxi vehicles.
“Following further evaluation by the board, the board has resolved to proceed with the unbundling and listing,” Transaction Capital said in a statement yesterday.
“The WBC share issue and the proposed pre-listing capital raise initiatives will enable WBC to make distributions to its shareholders, including Transaction Capital, to facilitate value realisation. The private placement will also unlock value for Transaction Capital through the proceeds received from the sale,” the board said in a statement.
Transaction Capital would use the proceeds primarily to settle debt.
Transaction Capital owns majority stakes in three underlying businesses, Mobalyz (SA Taxi and Gomo), WBC and Nutun.
“Given SA Taxi's disappointing performance in 2023 and the negative impact on the group, Transaction Capital has focused on unlocking shareholder value from its existing portfolio of companies,” the group said.
It said WBC was uniquely positioned in South Africa's second-hand vehicle market and had great potential. The company had met performance targets in the 2023 financial year, including an increase in sales volume and in market share.
Although earnings were down in the first half of the year, there was a strong recovery in the second half, and this positive momentum had continued into the 2024 financial year, the board said.
If the unbundling was implemented, shareholders would get direct access to a “market leading asset,” they said.
“WBC stands out from other players in the local motor industry because of its proprietary artificial intelligence, data and analytics capabilities, which optimise the vehicle buying and selling process, and a prominent national footprint with 15 vehicle supermarkets augmented by 74 buying pods.”
The listing would be founder-led together with the long standing management team, the group said.
The unbundling would be implemented based at a distribution ratio of not less than 0.30241 WBC shares for every 1 Transaction Capital share held.
Although Transaction Capital currently holds 74.9% of WBC, it was likely this would reduce to between 57.5% to 67.5% prior to unbundling and listing.
The shareholding of I VDW Holdings in WBC would also be reduced from 25.1% to not less than about 10% of the shares prior to unbundling and listing.
Transaction Capital would realise value of between R900m and R1.25 billion, by way of the private placement and through the proceeds realised from the WeBuyCars share issue, or through a bookbuild by WBC or any other capital raising initiative.
Transaction Capital would continue to be an active investor in Nutun and SA Taxi.
“While SA Taxi requires a reset to reposition it for growth, Nutun remains a strong leader in its market and will continue to execute against its growth objectives,” the group directors said.
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