WeBuyCars Holdings made a sparkling debut on the JSE on Thursday, reflecting the company’s growth trajectory from a local start-up to a major player in the used car market.
Shares in the company, which was spun out of Transaction Capital, opened at R20, eclipsing the initial public offering price of a R18.75 in what could be seen as indicative of investor confidence in the company, whose roots are firmly planted in the soil of entrepreneurial spirit.
Shares in WeBuyCars ended the session at R20.40, giving it a market capitalisation of about R8.5bn. It outpaced its closest stock market rival, Motus Holdings, which fell 0.76%.
“It has been an amazing journey that culminated in a listing on the JSE. We are excited about the road ahead as the listing opens up many opportunities, such as enhancing our brand, creating liquidity for shareholders and attracting staff,” said Faan van der Walt, the CEO of WeBuyCars.
For Transactional Capital shareholders, the listing separates a fast-growing division from the parent company, which has its hands full with SA Taxi, the struggling financier of hundreds of thousands of taxis. Taxi owners are struggling to keep up with repayments amid the cost-of-living crisis and job cuts.
The shareholders, including Coronation Asset Managers, are set to receive no less than 57.5% of WeBuyCars.
The deal helps Transaction Capital to raise as much as R1.3bn, enough money to inject cash into its veins and then fix a capital structure that threatens to drag WeBuyCars into SA Taxi’s messy collapse through so-called cross-default triggers at group level.
The flotation is also a rare piece of good news for the bourse operator, JSE Ltd, which has shrivelled in recent years as companies, big and small alike, question the merits of being listed.
“We are thrilled to welcome WeBuyCars to the JSE and excited to see a new listing for the year. The company’s decision to unbundle and list on our exchange demonstrates the strength of the SA capital markets and the JSE’s role in enabling firms to progress their expansion pursuits, facilitating direct access to a well-established equity market” said Valdene Reddy, director of capital markets at the JSE.
WeBuyCars’ journey began in the early 2000s when brothers Faan and Dirk van der Walt spotted a big problem in the used car market as individual consumers struggled to quickly sell older cars. Today it stands as a beacon of growth and innovation, having transitioned from a modest start-up to a publicly traded entity competing with established names like Bidvest, which runs McCarthy, and Motus, a colossus with a diverse brand portfolio and model range.
It has laid out an ambitious target of growing the number of vehicle sales by more than 60% over the next four to five years to 23,000 a month as it seeks expansion across the country with new warehouses and buying pods.
“The SA market for pre-owned vehicles is growing and still offers a relatively untapped market for WeBuyCars to explore,” the company said in a prelisting statement, a regulatory filing that provides potential investors with details about the business, terms of the share offering and its financial health.
WeBuyCars made R20bn in annual sales in the year to end-September, with about R1.14bn of that flowing to the bottom line in the form of core profit, or earnings before interest, taxes, depreciation and amortisation (ebitda).
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