Transaction Capital, a leading financial services group, has announced plans to unbundle its shareholding in WeBuyCars, a major player in South Africa’s second-hand vehicle market, and list it separately on the Johannesburg Stock Exchange (JSE). The move comes as Transaction Capital seeks to streamline its portfolio and unlock shareholder value.
Rationale for Unbundling
The decision to pursue the unbundling stems from Transaction Capital’s strategic focus on optimizing its existing portfolio. With majority stakes in three key businesses, including Mobalyz and Nutun, the company aims to enhance its financial position by reducing debt and eliminating liabilities.
Key Objectives of the Unbundling:
| Objective | Description |
|---|---|
| Reduce Debt | Transaction Capital aims to significantly reduce its level of debt. |
| Remove Cross-default Triggers | The unbundling seeks to remove cross-default triggers currently in place. |
| Eliminate WeBuyCars Put Option Liability | WeBuyCars put option liability will be eliminated through the unbundling. |
| Settle SANTACO Equity Cure | The unbundling aligns with settling the SANTACO equity cure if required. |
Positive Momentum for WeBuyCars
Despite challenges faced in the 2023 financial year, including disappointing performance from SA Taxi, WeBuyCars has demonstrated resilience and growth potential. The company reported increased volumes and market share growth, with a strong recovery observed in the second half of the year. WeBuyCars’ unique position in the second-hand vehicle market, coupled with its proprietary AI and analytics capabilities, makes it a market leader with substantial growth prospects.
Independent Evaluation
An Independent Committee has been formed to evaluate the unbundling process objectively. Additionally, an Independent Expert will provide a fair and reasonable opinion for shareholders, ensuring transparency and accountability throughout the process.
Next Steps
Transaction Capital has made significant progress in engaging with regulators and stakeholders regarding the unbundling. Following the announcement, formal engagements with key stakeholders will precede the final decision. Specific dates for the unbundling will be announced upon the distribution of the Circular.
Cautionary Announcement
Shareholders are advised to exercise caution when dealing with Transaction Capital’s securities until further announcements are made regarding the unbundling process. The proposed transaction may impact the price of Transaction Capital’s shares, and shareholders are urged to stay informed and act prudently.
Conclusion
Transaction Capital’s decision to unbundle its shareholding in WeBuyCars reflects its commitment to optimizing shareholder value and streamlining its business portfolio. With WeBuyCars’ strong performance and growth potential, the separate listing on the JSE presents an exciting opportunity for investors to directly access a market-leading asset. As the company progresses with the unbundling process, shareholders can expect further updates and clarity on the timeline and implications of the transaction.
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