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    HomeEcosystem NewsTransaction Capital Steers South Africa’s WeBuyCars to Landmark IPO Three Years After

    Transaction Capital Steers South Africa’s WeBuyCars to Landmark IPO Three Years After

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    In a significant milestone for the Johannesburg Stock Exchange (JSE), WeBuyCars, the used-car business under Transaction Capital (share code: WBC), commenced trading, marking the first listing of 2024 and sparking hopes of a resurgence in capital market activity after a prolonged dormancy.

    On its trading debut, shares of WeBuyCars ascended to R20 per share, surpassing the initial public offering price of R18.75 per share. This surge translated to a total market capitalization of R8.34 billion ($444 million) upon opening. The stock maintained its upward trajectory, trading at R20.30 by 11 a.m., signifying investor confidence in the venture.

    The listing of WeBuyCars comes as a beacon of optimism for the JSE, which has seen minimal activity in recent years, with only three companies making their debut in the past half-decade. In stark contrast, India witnessed a flurry of more than 50 IPOs within the same timeframe, underscoring the potential for growth and revitalization within South Africa’s capital markets.

    Anticipation now mounts for future listings, with the JSE expecting around 10 new entrants this year. Notable among these is Cilo Cybin Holdings, a cannabis firm slated to debut on April 12. However, one of the most eagerly awaited offerings is Coca-Cola Beverages Africa, slated for later in 2024. The beverage giant’s listing, previously delayed for three years due to unfavorable market conditions, aims to list on Euronext with a secondary listing on the JSE, potentially valuing the company at a substantial $8 billion, as reported by Bloomberg.

    Moreover, corporate restructuring and spin-offs add to the evolving landscape of the South African market. Pick n Pay Stores plans to separate its discount supermarket chain, Boxer, while RCL Foods intends to carve out its Rainbow Chicken business, reflecting a dynamic environment ripe for strategic maneuvers.

    WeBuyCars, under the stewardship of CEO Faan van der Walt, aims to significantly expand its market share, targeting a surge in traded vehicles from approximately 14,000 to 23,000 per month within the next four to five years. This ambition aligns with Transaction Capital’s vision following its acquisition of a 74.9% stake in WeBuyCars in 2021, a move that underscored confidence in the used-car sector’s growth potential.

    The investment proved lucrative for Transaction Capital, contributing R113 million ($6M) to its overall profit in the first half of the fiscal year ending March 31, 2021. The company’s foresight in capitalizing on the growing demand for used cars amid disruptions in global auto production due to the pandemic has positioned WeBuyCars for exponential growth. With supply constraints in the new vehicle market and limited public transport options, the used-car segment is poised for substantial expansion.

    WeBuyCars’ journey from its humble beginnings in 2001 as a passion project for brothers Faan and Dirk van der Walt to its emergence as a leading player in South Africa’s automotive market exemplifies entrepreneurial spirit and resilience. Initially self-funded for 16 years, the company experienced exponential sales growth, recording year-over-year increases of approximately 60% before securing investment from Fledge Capital in 2018.

    As WeBuyCars embarks on its new chapter as a publicly listed entity, its trajectory serves as a testament to the potential for innovation and success within South Africa’s entrepreneurial landscape. With a strategic vision, robust market demand, and investor confidence, the listing of WeBuyCars heralds a promising era of growth and opportunity in the South African capital markets.

    Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert. As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard.

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