Transaction Capital raises equity to finance WeBuyCars acquisition

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Transaction Capital SENS statement: 

Opening of accelerated book build:

  1. Introduction

Transaction Capital announces its intention to conduct a non pre-emptive cash placing of up to 33 093 389 new ordinary shares in the authorised but unissued share capital of the Company (the “Placing Shares”) to certain institutional investors (the “Placing”), which represents approximately 5% of the Company’s existing issued ordinary share capital base. The Placing Shares will be issued by the Company under and in accordance with its existing general authority to issue shares for cash, granted by shareholders at the annual general meeting of the Company held on 5 March 2021.

The Placing is being conducted through an accelerated bookbuild process (the “Bookbuild”), which will be launched immediately following this announcement. Goldman Sachs International and Investec Bank Limited (the “Managers”) are acting as joint bookrunners in respect of the Placing.

  1. Rationale and use of proceeds

Transaction Capital continues to actively identify investment opportunities in adjacent markets and related asset classes, in which its technology, proprietary data and analytics capabilities enable it to generate attractive risk-adjusted returns.

In September 2020, Transaction Capital concluded a transaction to become a 49.9% non-controlling shareholder in We Buy Cars Proprietary Limited (“WeBuyCars”) and has recently concluded agreements to increase its shareholding to a controlling stake of 74.9%, subject to, inter alia, regulatory approval (details of which can be found in the SENS announcement released on 27 May 2021).

The capital raised in this Placing will be used in part to finance this acquisition, with the balance being used to fund investment opportunities identified both through the divisions of the Group as well as our TC Ventures strategy. In addition, this capital will further enhance our financial flexibility and strategic agility to execute on opportunities resulting from market dynamics pursuant to the Covid-19 pandemic.

  1. Balance sheet strength 

Transaction Capital’s balance sheet remains well capitalised and liquid, with undrawn debt facilities of R900 million at a holding company level. The Group’s liquidity position is underpinned by our conservative capital strategy which has been tested and validated throughout the Covid-19 period.

Available facilities at SA Taxi and Transaction Capital Risk Services (“TCRS”) provide the capacity and liquidity to fund the organic growth initiatives underway in both SA Taxi and TCRS. SA Taxi is adequately capitalised, with ample liquidity available in undrawn debt facilities to fund expected loan origination into the 2022 financial year. At TCRS, as market dynamics become clearer, the acquisition of non-performing loan portfolios (“NPL portfolios”) in South Africa, Australia and Europe may provide opportunities to accelerate capital deployment plans within the division. TCRS’s funding requirements for the acquisition of NPL portfolios into the 2022 financial year are already secured.

  1. Update on trading environment 

Our divisions, SA Taxi and TCRS, and our investment in WeBuyCars, continue to demonstrate resilience and relevance despite the effects of Covid-19 on the market environment. Notwithstanding uneven rates of recovery in their markets, they are well positioned to drive organic growth. Their highly relevant business models and leading positions in defensive market sectors, alongside the diversification across and within each of them, underpin our expectations for growth and returns in the 2021 financial year, and beyond.

The recent announcement of lockdown Level 4 in South Africa has not had a material impact on any of the divisions in the Group. Based on our current assessment of operating conditions and growth prospects, headline earnings per share for the full 2021 financial year should exceed 2019 levels, with the Group resuming dividend payments.

Shareholders are referred to Transaction Capital’s interim results announcement released on SENS on 12 May 2021 for a detailed report of the Group’s trading environment and short to medium term prospects.

  1. The placing

The Placing is offered to qualifying investors (with the criteria set out in the Important Notes Section below)and will not be offered to the public in any jurisdiction. The Placing is not an offer to the public as contemplated under the South African Companies Act, No.71 of 2008, as amended (the “South African Companies Act”), having regard to the provisions of section 96(1)(a) and 96(1)(b) of the South African Companies Act.

The Placing Shares will be issued by the Company under and in accordance with its existing general authority to issue shares for cash, granted by shareholders at the annual general meeting of the Company held on 5 March 2021.

The price per ordinary share at which the Placing Shares will be placed (the “Placing Price”) will be decided at the close of the Bookbuild. The timing of the closing of the Bookbuild, the Placing Price and allocations are at the discretion of the Company and the Managers. The Placing Price will be announced as soon as practicable on the Stock Exchange News Service of the exchange operated by the JSE Limited (the “JSE”) after the close of the Bookbuild.

Pursuant to the terms of the placing agreement entered into between the Company and the Managers, the Company has agreed to customary lock-up arrangements for a period of 90 days from the closing date of the Placing.

The Placing Shares, when issued, will be credited as fully paid and will rank pari passu in all respects with the existing ordinary shares in the share capital of the Company, including the right to receive all dividends and other distributions declared, made or paid after the date of issue of the Placing Shares.

Subject to the approval by the JSE, listing and trading of the Placing Shares on the JSE is expected to commence at 09h00 on 9 July 2021 (or such time and/or date as may be agreed between the Company and the Managers). Investors will receive Placing Shares listed and trading on the JSE.

Transaction Capital SENS statement: 

Results of accelerated book build:

Shareholders are referred to the announcement released on the Stock Exchange News Service of the JSE Limited (“JSE”) on 8 July 2021 relating to the issue of up to 33 093 389 new ordinary no par value shares in the authorised but unissued stated capital of the Company (the “Placing Shares”) through an accelerated bookbuild (the “Bookbuild”) under and in accordance with the Company’s existing general authority to issue shares for cash, granted by shareholders at the annual general meeting held on 5 March 2021 (“Placing”).

Transaction Capital is pleased to announce the successful completion of the Bookbuild, which was multiple times oversubscribed. The Placing Shares were issued at a price of R35.50 per share, a 4.7% and 4.4% discount to the pre-launch 30 business day volume weighted average price of R37.25 and the close price of R37.15 respectively, as at market close on 8 July 2021, which is in compliance with section 5.52(d) of the Listings Requirements of the JSE. The 33 093 389 Placing Shares being issued represent in aggregate 4.9% of the Company’s issued ordinary share capital prior to the Placing.

The Placing raised gross proceeds of R1.17 billion for the Company. As described in the announcement released on 8 July 2021 regarding the opening of the Bookbuild, the capital raised through the Bookbuild will be used in part to finance the acquisition of a controlling stake in WeBuyCars, following regulatory approval, with the balance being used to fund investment opportunities identified both through the divisions of the Group as well as our TC Ventures strategy. In addition, this capital will further enhance our financial flexibility and strategic agility to execute on opportunities resulting from market dynamics pursuant to the COVID-19 pandemic. 

Goldman Sachs International and Investec Bank Limited (collectively the “Managers”) acted as joint bookrunners in respect of the Placing.

The Placing Shares, when issued, will be credited as fully paid and will rank pari passu in all respects with the existing ordinary shares in the share capital of the Company, including the right to receive all dividends and other distributions declared, made or paid after the date of issue of the Placing Shares.

An application will be made to the JSE for the listing of the Placing Shares. Subject to approval by the JSE, listing and trading (“Admission”) of the Placing Shares on the JSE is expected to occur at 09h00 on 14 July 2021 and dealings in the Placing Shares are expected to commence at the same time. The Placing is conditional upon, amongst other things, Admission of the Placing Shares on the JSE becoming effective and the placing agreement between the Company and the Managers (“Placing Agreement”) becoming unconditional and not being terminated in accordance with its terms prior to Admission.

Following Admission, the Company’s issued share capital will comprise 707 895 413 ordinary no par value shares. This figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their beneficial interest in, or a change to their beneficial interest in, the Company’s ordinary shares under section 122 of the South African Companies Act of 2008.

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