Transaction Capital, led by Jonathan Jawno, plans to increase shareholder value by separating its business WeBuyCars. This strategic action intends to raise roughly R1.25 billion ($65 million) in capital-raising initiatives, thereby strengthening the group’s financial position.
The strategy comprises a private placement of WeBuyCars shares for an additional R500 million ($26 million) and a capital raise of up to R750 million ($39 million) to boost Transaction Capital’s overall holding. These measures are the result of a portfolio examination, with an emphasis on creating shareholder value notwithstanding the challenges experienced by its subsidiary, SA Taxi.
Jawno, a founder member of Transaction Capital, owns a 9.59 percent stake in the company, making him the second-largest stakeholder, after only Public Investment Corporation.
His ownership of 72,667,000 ordinary shares demonstrates his dedication to the group’s strategic objectives. The decision to unbundle and float WeBuyCars is expected to help resolve problems in 2023, such as debt reduction, WeBuyCars put option obligation resolution, and outstanding payment settlement.
Despite the problems faced in 2023, WeBuyCars displayed perseverance and agility, with a strong comeback in the latter part of the fiscal year. This positive momentum has carried over into 2024, with key financial metrics for the four months ending January 31, 2024 revealing a 16% increase in revenue to R7.64 billion ($401 million) and a 20% increase in core earnings to R267 million ($14 million) compared to the same period in 2023.
Transaction Capital’s strategic decision to unbundle and list WeBuyCars demonstrates its commitment to increasing shareholder value and addressing problems. The money raised is expected to improve the group’s financial status, allowing it to negotiate market challenges and position itself for long-term growth. Investors are closely monitoring this development as the company plots its course in the volatile financial landscape, hoping for a profitable future.
