Transaction Capital eyeing acquisitions

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Johannesburg - South Africa's asset-backed lender Transaction Capital is scouting for businesses to buy over the next 18 to 24 months and plans to spend 2 billion rand, its chief executive said on Wednesday.

Transaction Capital has 750 million rand left over after selling two companies last year and plans to raise the remaining amount by borrowing or issuing new equity, David Hurwitz told the Reuters Africa Investment Summit in Johannesburg.

“It could take a bit of time. Our market cap is only 3 billion and to buy something in one shot for 2 billion could be viewed as aggressive, so we would like to split that into a few deals over a period of time,” he said.

Last year Transaction sold a payments and ATM business for $95 million and unsecured lender Bayport Financial Services for about $133 million.

It has since returned some of that capital to shareholders.

Transaction Capital, which also has a debt collection service, intends to raise another 2 billion rand in debt this year.

About 1.5 billion rand of that will be for SA Taxi, a unit that finances South Africa's ubiquitous mini-buses.

Hurwitz said SA Taxi has loaned money for 24,000 of the 70,000 or so financed taxis plying South African roads.

Borrowers pay between 17 and 26 percent in interest.

Four in five South Africans rely on 200,000 of the buses to get around despite many of them being old and badly maintained and causing a high number of road accidents.

Transaction Capital also offers taxi owners insurance, with a quick turnaround on claims to get vehicles are back on the road, Hurwitz said.

It also has repair workshops to refurbish repossessed vehicles to get a higher value when they are resold.

Only about two in every 10 taxi buyers default on their payments, he said.

The company that listed in Johannesburg in 2012 has 5.5 billion rand on its SA Taxi book and another 339 million rand in Rand Trust, which finances small businesses that would otherwise find it difficult to raise money from banks.

A separate unit, MBD Credit Solutions, acts as an debt collecting agent to debt providers or buys the non-performing loan books outright and follows up with borrowers. - Reuters



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