RBH to invest R500m in Transaction Capital, acquire further 12.4 million shares

Transaction Capital SENS statement: 

Royal Bafokeng Holdings (RBH) was introduced as a strategic shareholder in Transaction Capital during November 2020 (as reported in the FY20 results announcement).

`We are pleased to announce RBH’s intention to invest R500 million into the group as a long-term strategic shareholder. 12 million Transaction Capital shares, representing approximately 1.8%, were acquired via a secondary purchase in the market on 20 November 2020. RBH is expected to increase its stake by subscribing for a further 12.4 million shares in January 2021, subject to shareholder approval. A circular to shareholders and notice of general meeting in this regard will be distributed in due course.`

Circular

Please see attached PDF (also available for download at https://www.transactioncapital.co.za/results-reports.php) being the circular to convene the General Meeting in respect of the granting of a specific authority to issue 12.4 million authorised but unissued ordinary shares at R20 per share for cash to RBH.

General Meeting on 14 January 2021 – please participate and vote

This transaction is beneficial (rationale summarised below) to Transaction Capital and its shareholders as it is the start of a long term strategic relationship between RBH and Transaction Capital. Please vote thereon by participation in the General Meeting on 14 January 2021. Link below provides access to the portal for guidance on voting, access and participation at the meeting.
www.smartagm.co.za

If you encounter any problems accessing the portal or require further guidance, please email [email protected].

Rationale

  1. RBH is a highly regarded and respected South African investment firm and thus the Board of Transaction Capital is fully supportive of the specific issue which will be the start of a long term strategic relationship between RBH and Transaction Capital.
  2. RBH’s investment in Transaction Capital, will also provide an important contribution to Transaction Capital’s Broad-Based Black Economic Empowerment credentials.
  3. RBH’s shareholding in Transaction Capital prior to this specific share issue is approximately 1.8%. Should this specific issue of 12.4 million shares be approved, RBH’s shareholding in Transaction Capital increases to approximately 3.7%.
  4. As reported in the FY20 results, Transaction Capital is well positioned for growth:
    1. Transaction Capital has a near 20-year track record for high-quality earnings growth and attractive risk-adjusted returns, the group achieved compound annual growth in core headline earnings per share of 23% for the five years to 30 September 2019. Prior to the effects of COVID-19, the group was on track to deliver earnings growth in line with this past performance.
    2. SA Taxi and Transaction Capital Risk Services (TCRS) demonstrated resilience in their agile responses to the volatile dynamics accompanying the COVID-19 pandemic. Their operational, financial and strategic flexibility allowed them to quickly align their operating models, financial structures and growth plans to prevailing economic realities and emerging opportunities. Operational activity in many instances is now nearing pre COVID-19 lockdown levels. The group’s swift responses to the impacts of the pandemic underpinned a decisive recovery in our divisions and enabled significant strategic progress in FY20.
    3. The business models of SA Taxi, TCRS and WeBuyCars are well established and have gained relevance in the COVID-19 environment, underpinned by the defensive characteristics of its respective market sectors. With support from the group executive office, the SA Taxi Group and the TCRS Group will continue to refine its strategic positioning and competitive value propositions, diversify its revenues and expand its total addressable market.
    4. Transaction Capital’s balance sheet is well capitalised and liquid, underpinned by a conservative equity capital strategy. The prudence of Transaction Capital’s capital management strategy, and the resilience of the group’s capital structure, was tested and proven in 2020.
    5. Transaction Capital’s current assessment of operating conditions and growth prospects sees the group resuming its strong organic growth trend in the coming year, with FY21 exceeding FY19 levels in line with pre COVID-19 growth rates.

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