Following a year with mixed financial results, WeBuyCars (WBC) owner Transaction Capital is pursuing the unbundling of the pre-owned car business from its portfolio to list it on the Johannesburg Stock Exchange (JSE).
If approved by the board, the listing will be implemented through a pro rata distribution of WBC shares held by Transaction Capital and all shares will be simultaneously listed on the main board of the JSE.
The date of the possible listing is still to be announced.
Rationale behind the WBC bundling
Transaction Capital owns majority stakes in three businesses: Mobalyz (SA Taxi and Gomo), Nutun, and WBC.
Following the disappointing performance of SA Taxi in 2023 and the negative impact this had on the broader Transaction Capital group, the organisation has shifted focus to “unlocking shareholder value” from its existing portfolio of companies, it said.
With the reshuffling of its core businesses, the group aims to achieve the following at holding company level:
- Significantly reduce the level of debt
- Eliminate the WeBuyCars put option liability
- Remove the cross-default triggers that are currently in place
- Settle the SANTACO equity cure of R285 million if payment is called upon.
The WBC listing presents an attractive option to reach these goals.
“WeBuyCars is uniquely positioned in South Africa’s large and extremely relevant second-hand vehicle market, giving it substantial growth potential,” said Transaction Capital.
“In the 2023 financial year (“FY2023”), WeBuyCars delivered on key performance metrics including increased volumes and growth in market share. Although earnings were down in the first half of FY2023, the business saw a strong recovery in the second half.”
The company expects this positive momentum to continue into 2024 in spite of adverse market conditions, such as high interest rates and low consumer confidence.
“The unbundling, if implemented, will afford shareholders the opportunity to have direct access to a market-leading asset,” it said.
“WeBuyCars is differentiated from any other players in the local second-hand vehicle market by, inter alia, its proprietary artificial intelligence, data and analytics capabilities which optimise the vehicle and buying-selling process, and a prominent national footprint with 15 vehicle supermarkets augmented by 74 buying pods.”
Transaction Capital said the board has made significant progress in engaging with regulators and stakeholders concerning the unbundling and listing.
“Following the release of this announcement, the board will engage on a more formal basis with other key stakeholders in the operating context of the group,” it said.
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