Transaction Capital Limited (Jul 2022)


The ratings on the group primarily reflect the strengths and weaknesses of its three major subsidiaries, SA Taxi, TCRSH and We Buy Cars.

Further rating support is derived from the NOHC’s (non-operating holding company), Transaction Capital Limited, net ungeared and highly liquid balance sheet, the absence of regulatory structural subordination, and the diversification benefits from different business lines of subsidiaries.

GCR views Transaction Capital as a conglomerate that typically seeks to acquire capital light businesses, bolt-on or yield enhancing opportunities. Cross selling of their existing products and services within such new acquisitions are an essential component.

The group had increased its stake in We Buy Cars by 25.0% in September ’21 to 74.2%. The high profitability of We Buy Cars and additional capital injection would further advance We Buy Cars market presence (c.7% vehicles sold) to an even larger proportion of the South Africa market. We Buy Cars has a well-established internet presence, however the planned rollout of new branches across various provinces should assist in turning stock. The used vehicle market has proved itself a defensive sector especially considering the number of new vehicles sold.

The group’s holding of TCRSH and SA Taxi remained unchanged.

GCR calculated the overall risk score of Transaction Capital by weighing each of the respective Rating Factors of the three operating entities by the revenue contributions from each entity. This ratings approach would translate to a degree of ratings volatility given the variability of revenue streams from the respective entities.

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