SOUTH AFRICA – Transaction Capital, an investment management company, has acquired 74.9% stake in WeBuyCars, a used car platform that follows the purchase of an additional 25% stake for 1.6 billion rand (US$116 million).
The sale agreement is conditional on the approval of the South African Competition Commission (CCSA). Once finalized, it will allow Transaction Capital to take control of the company founded in 2001 by brothers Faan and Dirk van der Walt. They would retain a minority share of 25.1% via family trusts.
“The performance of WeBuyCars confirms Transaction Capital’s view that this transaction offers a compelling opportunity to accelerate,” said David Hurwitz, Managing Director of Transaction Capital.
“Obtaining a majority stake in a company with exceptional growth prospects and a leadership position in a market segment is crucial in a very defensive market. The operational resilience of WeBuyCars in a difficult economic environment demonstrates that it is structurally well positioned for growth.”
“Obtaining a majority stake in a company with exceptional growth prospects and a leadership position in a market segment is crucial in a very defensive market.“
David Hurwitz – Managing Director, Transaction Capital
According to Transaction Capital, it began negotiations with WeBuyCars shareholders in early May to increase its stake in the company from 49.9% to 74.9%.
The structure’s entry into the fundraising round in September 2020 was profitable for Transaction Capital, and even contributed R113 million (US$8.17m) to its overall profit achieved during the six-month period ended March 31, 2021, underlines the company in its half-year business results.
As a result of the pandemic, global auto production has been disrupted. With the supply of new models limited, many South Africans have turned to used cars.
Transaction believes that this sector will experience significant growth over the next few years, due to constraints related to the accessibility of new vehicles and the limited availability of public transport.
Last year, Transaction Capital paid R1.47 billion (US$101m) in cash and R16.4 million (US$1.19m) in freshly issued ordinary shares at R20 (US$1.45) each for a total of R329.3 million (US$23.80m).
Before now, WeBuyCars owned 60 percent through the family trusts of founders Faan and Dirk van der Walt, whereas Fledge Capital Proprietary owned 31.5 percent with the rest, 8.5 percent owned by minority shareholders.
Founded in 2001, WeBuyCars offers online valuations and purchase of used cars in South Africa. WeBuyCars began as a passion for brothers Faan and Dirk van der Walt in Bronkhorstspruit, an hour’s drive east of Pretoria, South Africa’s capital.
Faan used to acquire, patch up, and sell used automobiles as a youngster, having learnt auto maintenance from his father, along with his brother Dirk.
WeBuyCars had been self-funded for 16 years until Fledge Capital’s investment in 2018. The company had no operating debt and recorded year-over-year sales increase of about 60%.
