Credit provider Transaction Capital says it has concluded agreements to increase the group’s shareholding in WeBuyCars from 49.9% to 74.9%.
The remaining 25.1% of the shares in WeBuyCars will be held by the family trusts of the founding shareholders, Faan and Dirk van der Walt, the group said in a statement on Thursday (27 May).
The group expects the additional investment of 25% in WeBuyCars which is subject to Competition Commission approval, to be immediately value and earnings accretive.
Once the conditions precedent are met and the proposed transaction takes effect, Transaction Capital said it will be able to consolidate a greater proportion of WeBuyCars’ high-growth earnings.
Transaction Capital’s CEO, David Hurwitz said: “Should the proposed transaction to acquire control of WeBuyCars obtain regulatory approval, the exceptional growth prospects of this business will accelerate and support a sustainably higher growth trajectory for Transaction Capital.”
WeBuyCars is a principal trader of used vehicles through its integrated e-commerce and physical infrastructure, offering finance, insurance and other allied products.
Approximately 11 million passenger vehicles are in circulation in South Africa. This vehicle ‘car park’ has grown steadily, increasing the overall market by 5% to 6% a year over the last decade, Transaction Capital said.
Earlier in May, Hurwitz said that approximately 8,000 vehicles were bought and sold on the WeBuyCars in March 2021, 45% above pre-Covid levels. Its medium-term target to increase the volume of vehicles traded to 10,000 vehicles per month remains on track.
“In the medium term, WeBuyCars’ digital capabilities and credible e-commerce platform will support even higher growth,” said Hurwitz. “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.”
On 11 September 2020 Transaction Capital acquired a 49.9% non-controlling stake in WeBuyCars pursuant to a transaction concluded with WeBuyCars and its shareholders.
This initial transaction included options which, if exercised, would enable Transaction Capital to acquire a further 25% shareholding in WeBuyCars by 2023. However, the opportunity arose to cancel those agreements in favour of entering into a transaction that would result in Transaction Capital holding a controlling stake of 74.9% in WeBuyCars, Transaction Capital said.
WeBuyCars CEO, Faan van der Walt said: “We have been impressed with the insights of the directors appointed by Transaction Capital to the WeBuyCars board, the manner in which Transaction Capital has engaged with leadership teams in its subsidiaries and the cultural fit between the two organisations.
“Further, we have seen the operations of SA Taxi and believe that Transaction Capital has the necessary expertise to advance WeBuyCars’ vision of offering credit and insurance related products to its customer base.”
Transaction Capital said it has identified further growth opportunities for WeBuyCars as part of its stable, notably the opportunity to leverage SA Taxi’s expertise and capabilities to enable WeBuyCars to extend its services to include a credit offering, as principal as opposed to an intermediary.
The group said that its strategy to grow its e-commerce offering, expand geographically and enhance unit economics by higher penetration of finance, insurance and allied products (F&I products), continues to yield results.
“Should the proposed transaction to acquire control of WeBuyCars be successful, the group is well placed to drive these and other strategic growth and synergies,” said Hurwitz.