The transaction would see Santaco acquiring R1.7bn worth of new shares in SA Taxi, with R1.2bn funded jointly by Standard Bank and Futuregrowth Asset Management, an Old Mutual subsidiary, and the remainder facilitated through vendor funding.
SA Taxi parent Transaction Capital rose 4.22percent on the JSE yesterday to trade at R19 a share as the market digested the news of the Santaco-SA Taxi partnership.
David Hurwitz, Transaction Capital chief executive, described the deal as a win-win for both parties as most taxi operators did not qualify for traditional finance, with about eight out of 10 SA Taxi clients deemed unsuitable for bank finance.
Hurwitz said he believed that there was a real alignment in the interests of both parties.
“We have been involved with the taxi industry for 20 years and believe that this partnership was inevitable. We feel together we can achieve more, including approaching the government for subsidies,” said Hurwitz.
Taxi SA is expecting to benefit from Santaco’s membership in terms of selling its products and services including insurance.
“We have not done well to sell insurance to the open market and Santaco understands the market better. They will help us design new products, for example,” said Hurwitz.
SA Taxi would use around R1bn of the R1.2bn net proceeds to settle its debt and use the remaining to fund growth.
SA Taxi said yesterday that its loan book grew 13percent to 30617 vehicles in the year to end September.
The company said its loan value stood at R9.4bn. It also recorded a 21percent growth in headline earnings to R368million in 2018.
Santaco, which in 2015 launched an airline, has been mulling entry into the financial services sector in a bid to empower minibus taxi owners.
Santaco president Philip Taaibosch said the transaction was expected to extend shareholding of SA Taxi to all minibus owners.
“The proportional ownership structure will ensure that the economic benefits of this investment flow through to all broad-based provincial structures of Santaco via a trust which will receive dividends from SA Taxi,” said Taaibosch.
Since 2008, SA Taxi has provided R21bn in loans to taxi operators, supporting the creation of an estimated 72423 small and medium enterprises with more than 130000 direct and 215000 indirect jobs created.
Commenting on the financial results yesterday, Hurwitz said in recent years, persistently difficult economic conditions combined with high minibus vehicle prices and escalating fuel costs had put the minibus taxi industry under strain.
“During the year, average petrol and diesel prices rose by 12percent and 16percent respectively. Minibus taxi prices increased by 2percent, which brought the recommended retail price for a Toyota diesel vehicle to approximately R435 000 at year-end adjusted for the increased VAT rate of 15percent compared to about R350000 four years ago.”
Transaction Capital shares gained 3.95percent on the JSE yesterday to close at R18.95.