Will Transaction Capital Unbundle WeBuyCars?
Industry News
Transaction Capital is thinking about separating WeBuyCars from its overall business and listing it independently on the JSE stock exchange.
Transaction Capital and plans for WeBuyCars
Transaction Capital’s CEO, Jonathan Jawno, has said that they are currently looking into this option in collaboration with WeBuyCars founders Faan and Dirk van der Walt.
WeBuyCars is the most valuable part of Transaction Capital’s business and has been doing really well despite what can only be described as challenging market conditions. Other parts of the business (SA Taxi for example) have not been doing as well unfortunately.
Why List On the Stock Market?
Companies list on a stock exchange mainly because it helps them raise a lot of money by selling shares to the public.
This money can then be used to grow the rest of the business, pay off debts, or to make strategic moves like buying other companies.
Being on the stock market also allows existing shareholders (like founders and early investors) to sell their shares and turn their investments into cash. It also gives the company more visibility and enhances their reputation which attracts attention from big investors, analysts, and the media.
Listing on the stock exchange can also be a way to attract and keep talented employees by offering them stock options. Plus, being able to use their stock as a type of currency can be handy if the company wants to merge with or buy another business.
Why They Might Not Do It
While the idea might seem beneficial for shareholders, there’s a potential problem with debt holders. One financial expert has recently warned that separating WeBuyCars from Transaction Capital could be troublesome for debt holders.
This move would essentially leave them with all the existing debt but without the valuable WeBuyCars asset, possibly creating challenges in negotiations related to debt agreements.
While most of Transaction Capital’s debt is protected within SA Taxi, unbundling WeBuyCars might face resistance from existing debt holders.
Another expert from FNB Wealth and Investments added that even if that debt is legally protected, leaving debt holders with potential issues might harm Transaction Capital’s future financing opportunities as it may negatively impact the company’s credibility with banks and make it harder to get more credit in the future.
So, these are the factors they will have to take into account before making any big decision on unbundling and listing.
