Zeda receives JSE approval to list after regaining financial muscle after pandemic

Zeda Group is a car rental, fleet management and leasing business, operating in South Africa and 10 other countries in sub-Saharan Africa under the ‘Avis’ and ‘Budget’ global brands, pursuant to a long-term licence secured from ABG. File photo

Zeda Group is a car rental, fleet management and leasing business, operating in South Africa and 10 other countries in sub-Saharan Africa under the ‘Avis’ and ‘Budget’ global brands, pursuant to a long-term licence secured from ABG. File photo

Published Nov 29, 2022

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Zeda has received JSE approval and Barloworld’s vehicle rental and lease business expects to list on December 13 with some 189.64 million shares in issue, a pre-listing statement said yesterday.

Barloworld is unbundling Zeda through a one-for-one distribution in specie of the issued Zeda shares held by Barloworld. It is anticipated that following the unbundling, about 58.42% of the Zeda shares will be held by public shareholders.

Zeda Group is a car rental, fleet management and leasing business, operating in South Africa and 10 other countries in sub-Saharan Africa under the "Avis" and "Budget" global brands, pursuant to a long-term licence secured from ABG.

Zeda is the only integrated mobility provider in sub-Saharan Africa offering both short-term car rental and long-term fleet management and leasing solutions to a broad base of customers.

SAVRALA’s latest figures show Zeda Group is a market leader in the car rental and full maintenance leasing industries in South Africa.

The car rental business received a reported revenue market share of 38.1% for the12-month period September 2021 to August 2022; and its full maintenance leasing business holds a 21.9% market share.

The group said the agility of the integrated operating model of Zeda allowed for flexibility to right-size its fleet through car sales in the cyclical car rental industry, while providing upside in times of higher inflation.

Zeda employs some 1 600 employees across its operations.

For the financial year ended September 30, 2021, Zeda reported combined carve-out revenue of R7.67 billion, incurred operating expenses of R5.05bn, and reported Ebitda (earnings before interest tax depreciation and amortisation) of R2.2bn.

The car rental business contributed R1.73bn (22.6%) of revenue, and the leasing business contributed R1.99bn (25.9%), while sales revenue of R3.95bn (51.5%) was generated from the sale of used cars from the inventory of the car rental business and leasing business.

For the six months ended March 31, Zeda reported combined carve-out revenue of R3.71bn, incurred operating expenses of R2.06bn and reported EBITDA of R1.4bn.

The car rental business contributed R1.2bn of the six month revenue, while the leasing business contributed R968m (26.1%); and sales revenue of R1,54bn (41.5%) was generated from the sale of used cars from the inventory of the car rental and leasing business.

Revenue generated through car sales was driven by a buoyant used car market and various portfolio optimisation strategies.

A portfolio optimisation and unlocking of long-term value strategy, implemented during the pandemic, resulted in a strong financial turnaround of the business.

It included right-sizing the fleet to match customer demand and size of the car rental and leasing market; the review and closure of non-profitable business lines and a reduction of footprint in non-strategic and low-throughput rental branches and used car retail branches.

Some corporate-operated branches were converted into agency-operated branches; the staff headcount was restructured in line with the severely impacted rental market; and a monthly subscription offering was re-established to diversify revenue.

Medium to heavy commercial vehicle leasing was introduced, and the car rental business and leasing business were integrated, which resulted in consolidation of functional support areas into a shared services function.

BUSINESS REPORT