Transaction Capital delivers solid first-half earnings, seeks to take control of WeBuyCars

Transaction Capital, a leading South African financial services group, has recently announced its interim results for the first half of the fiscal year ending in March 2021. The company reported an impressive 18% increase in core headline earnings compared to pre-pandemic levels, showcasing its resilience and growth despite the challenging economic environment. The CEO of Transaction Capital, David Hurwitz, joined CNBC Africa to discuss the company's performance and future plans. Hurwitz highlighted the significant role played by the organization's existing divisions in driving this growth, particularly emphasizing the positive impact of including WeBuyCars, in which Transaction Capital holds a 49.9% stake. He attributed the strong earnings growth to a combination of organic growth and the addition of WeBuyCars to the company's portfolio. The inclusion of WeBuyCars as a new division has proven to be particularly promising, with Hurwitz describing the business as 'the most exciting' among their operations. He pointed out that the current market conditions, characterized by high prices of new vehicles and consumers' shift towards secondhand cars, have created favorable opportunities for WeBuyCars. Additionally, the digital aspect of the business, being an e-commerce platform, has further contributed to its growth potential. Hurwitz also hinted at potential international opportunities in the secondhand car and e-commerce sector, underscoring the company's strategic expansion plans. One of the key highlights of the interview was Transaction Capital's proposal to increase its stake in WeBuyCars to 74.9%, a move that Hurwitz described as 'transformational'. He explained that this strategic decision would establish WeBuyCars as a third pillar of the company's business model. By acquiring a controlling stake in the business, Transaction Capital aims to leverage its expertise in car finance and insurance to further enhance WeBuyCars' offerings and expand its market presence. Hurwitz expressed confidence in the management team and the founders of WeBuyCars, emphasizing their resilience and potential for growth. The proposed stake increase reflects Transaction Capital's long-term commitment to driving innovation and value creation within its portfolio companies. In response to a question regarding the challenges faced by the taxi industry in South Africa, Hurwitz acknowledged the essential role played by minibus taxis as a key mode of public transportation. He highlighted the industry's significant contributions to the economy, including fuel levies and tax payments amounting to over 8 billion rands. Despite facing regulatory and financial challenges, Hurwitz called for government support to enable the industry to thrive and contribute more effectively to the nation's tax revenue. Looking ahead, Hurwitz expressed optimism about Transaction Capital's outlook for the remainder of the year, projecting a continued growth trajectory and aiming to achieve high teen earnings per share growth. He emphasized the company's operational agility and strategic resilience in navigating uncertain market conditions, reaffirming their commitment to delivering strong financial performance. With a focus on sustainable growth and value creation, Transaction Capital remains poised to capitalize on emerging opportunities and drive innovation within the financial services sector.