Transaction Capital is set to acquire a non-controlling 49% stake in South African car buying firm, WeBuyCars for close to US$ 110 million, estimating the company’s value at US$ 219 million.
Transaction Capital will seal the deal by paying US$ 87.5 million in cash and shares worth US$ 19.5 million. The acquisition also provides Transaction Capital with the option to take a controlling stake in WeBuyCars in the future.
Transaction Capital is looking to finance the payment from a combination of existing cash resources, existing debt facilities and by funding from WeBuyCars, which will be facilitated through a subscription by WeBuyCars of preference shares in the subscriber.
WeBuyCars buys and sells used vehicles. It also uses data- and technology-led e-commerce and physical infrastructure; it has a large footprint in SA, including seven “vehicle supermarkets” and 19 “buying pods”.
The company will continue to operate independently, adjacent to Transaction Capital’s SA Taxi subsidiary.
The company said in a statement on Tuesday, “The investment carries no integration risk for Transaction Capital.”
Transaction Capital CEO David Hurwitz said, “This investment is an exceptional opportunity to own a significant interest in a trader of used vehicles in South Africa, serving its clients through both an e-commerce and physical dealership infrastructure.
The investment in WeBuyCars will be immediately value-accretive, converting interest income on our undeployed capital into higher-yielding operating earnings, accelerating Transaction Capital’s earnings growth rate. Options are in place, which if exercised and implemented, after regulatory approval, would result in Transaction Capital increasing its interest in WeBuyCars at a future date.”
The Transaction Capital statement added that, “Sellers can be certain of a fair price and immediate cash settlement on acceptance of the offer. Buyers are given independent vehicle condition reports and high-resolution photos to facilitate their purchase decisions.”
WeBuyCars CEO and co-founder Faan van der Walt said, “Significant potential exists to drive penetration and uptake of our business-to-consumer offering, as online and e-commerce trading will drive higher levels of efficient and reliable service, while dissolving physical and geographic barriers. Over time, we expect that e-commerce in the South African vehicles market will gain traction.”