The JD Group has sold its interest in Ariva, the vehicle private leasing joint venture established with listed transport and mobility group Imperial Holdings in 2012, for an undisclosed amount.
Imperial announced yesterday that it had formed a new partnership in Ariva with business finance and advisory services firm Merchant West.
Johan van der Merwe, the chief financial officer of the JD Group, said yesterday that the furniture retailer had sold its stake in Ariva in the first quarter but declined to comment on the sale price. The group had decided to sell the stake to concentrate on its core business.
“We stated earlier that we were out of personal loans and would be concentrating on our core business. Ariva is not part of our core business,” he said.
David Smith, Ariva’s managing director, said Merchant West had acquired the JD Group’s interest in Ariva and would provide the financial backing for Ariva’s current and future assets. Smith said Merchant West would also bring additional competencies and effectiveness in expanding Ariva’s already strong product offering in the local market.
“Previously our model was established based on a one-size-fits-all approach. However, with the technical expertise Merchant West has brought to the table we are now able to offer priced-for-risk profiling, which means consumers with a good credit or risk profile will see even more benefits from our product offering.
“This priced-for-risk profiling will also enable us to expand our product offering to include more vehicle makes and models,” he said.
Ariva was already exploring and refining a new product scope it expected to launch soon, which would also enable it to tailor solutions for corporates that were open to a group scheme that allowed their full staff complement to apply for long-term vehicle leases.
He said private vehicle leasing was one of the fastest-growing forms of vehicle finance in developed markets but was still largely untapped and had huge potential in emerging markets.
“We believe the benefits of leasing will be embraced by more South African consumers in the future and with this move, we are certainly aiming for new heights,” he said.
Merchant West has not operated in the consumer market before but has 15 years experience in corporate finance and advisory services.
Braam Viljoen, the chief executive of Merchant West, said Ariva presented the group with a great platform to not only broaden its access to a larger pool of clients but also to expand its expertise and raise its profile into a new market.
“While Ariva’s existing product offering provided a strong baseline, with years of experience in financial services we have been able to take a more technical and sophisticated approach to how Ariva’s products are structured.
“This, coupled with our ability to access capital markets to source funding in the long run, means we will be able to grow Ariva’s offering and access additional markets.”
Manny de Canha, the chief executive of Imperial subsidiary Associated Motor Holdings and an executive director of Imperial, said at Ariva’s launch in May 2012 that the target was to get to 100 vehicle leasing deals a month in the short term and 2 000 deals a month within three years.
Smith confirmed last year that Ariva had made slower progress than it anticipated in getting consumers to buy into the concept of leasing vehicles but still expected Ariva to have about 8 000 vehicles on its books within five years to fully use the R1 billion funding it secured for the venture.
JD Group rose 1.30 percent to close at R25.02 yesterday.