WeBuyCars Goes Public on JSE as Transaction Capital Exits Entire Stake

The South African automotive industry landscape is witnessing a significant milestone as WeBuyCars prepares to list on the Johannesburg Stock Exchange (JSE) in early April. The company, which commenced operations with only two employees, has undergone an exponential growth phase, evolving into a powerhouse with over 2,800 employees selling upwards of 13,500 cars per month.

Established in 2001, WeBuyCars is an exemplary case of organic prosperity, having never sourced external debt financing. The value of prudent reinvestment is evident in the company's trajectory, as the founding brothers, Dirk and Faan van der Walt, opted not to extract salaries, focusing on the reinvestment of profits to catapult the business forward.

In an investor presentation held on February 16, WeBuyCars delineated its bold strategy and presented its investment case with an eye toward its imminent JSE listing. The presentation illuminated the company's success story, celebrating its savvy growth mechanics in a fiercely competitive market without ever leaning on debt as a crutch.

2018 marked a noteworthy chapter in WeBuyCars’ history when Transaction Capital acquired a sweeping 49.9% stake for R1.8 billion. This investment welcomed a period of accelerated performance, as the company augmented its trading volume significantly since the Transaction Capital infusion.

However, the economic toll of the Covid-19 pandemic has plunged Transaction Capital into financial duress, majorly attributed to the difficulties faced by its SA Taxi division. To navigate these turbulent waters, Transaction Capital has resolved to divest various assets to manage its debt load. The decision included the strategic unbundling and separate listing of its WeBuyCars stake on the JSE, with expectations to raise between R900 million and R1.25 billion through this process.

According to plans unveiled in the investor roadmap, the culmination of the unbundling will result in Transaction Capital surrendering its entire shareholding in WeBuyCars. Meanwhile, the founders’ stake will be adjusted to a 10% interest post-listing, a downgrade from their preceding 25.1%.

The impending restructured shareholding is explicitly depicted in a comparative chart, elucidating the distribution of equity in WeBuyCars before and after its JSE debut.

The market is abuzz with the prospects of WeBuyCars’ performance as a standalone entity on the stock exchange. Analysts speculate on the potential market response to a firm that has manifested resilience, growth, and a self-sustaining model that rejects traditional reliance on borrowed capital.

As WeBuyCars gears up for this significant transition, the South African business community is offered a spectacle of what focused reinvestment and organic development can achieve even in the face of challenging economic climates. The unfolding narrative of WeBuyCars will serve as a testament to the strength and innovation inherent within South African entrepreneurship.