WeBuyCars lists with fanfare on JSE main board

By Beth Amato

SOUTH Africa’s largest used-vehicles seller, WeBuyCars, listed on the Johannesburg Stock Exchange (JSE) main board yesterday with a higher-than-anticipated opening price of R20 a share.

Pegged initially at R18.75 for the public offering, the first few minutes of the WeBuyCars listing raked in 84 590 shares, considered a high volume.

JSE’s head of trading operations, Martin Koch, said at the listing event in Sandton that there was a considerable demand for the used-car business shares.

“This is some of the busiest activity we have seen in years. Traders were willing to buy at the market’s price,” he said.

WeBuyCars was the second among 10 expected listings for 2024.

WeBuyCars parent company, Transaction Capital, raised about R900 million in capital ahead of yesterday’s listing.

The number of ordinary shares in issue was 417.2m.

As part of its unbundling process from Transaction Capital, WeBuyCars listed separately, echoing a growing trend in the JSE's equity capital markets.

JSE’s head of capital markets Valdene Reddy said the separate listing revealed the effectiveness of unbundling operations in enhancing business growth and increasing capital.

“The JSE is thrilled to welcome WeBuyCars and sees it as a testament to the strength of South African capital markets. The bourse remains committed to creating an enabling environment for listed and prospective entities,” Reddy said.

The recent listing brings the total number of listed companies on the JSE to 283 and a market capitalisation of R18.4 trillion.

From humble beginnings as a small family business in 2001, WeBuyCars now employs 2 800 workers and has about 340 buyers across South Africa.

The company has 15 “supermarkets” which sell a diverse range of second-hand cars and 74 buying pods.

WeBuyCars CEO Faan van der Walt said the company’s selling point was its innovation in simplifying and fast-tracking the vehicle buying and selling process.

The group reports that in February 2024, it bought more than14 000 cars and sold more than 13 000, with revenue totalling R1.8 billion.

“Our goal has been to reduce bureaucracy and complexity. But we believe in purpose before profits. It is a huge responsibility to be listed on the JSE. For instance, we are custodians of people's pensions and their life savings,” he said.

Van der Walt added that the listing would elevate the group’s brand, create liquidity for shareholders, and attract more staff.

Meanwhile, WeBuyCars’s unbundling from Transaction Capital follows a significant 40% drop in the latter’s share price in March 2023 owing to exposure to the struggling taxi industry.

Last year, Transaction Capital said that its once-performing cash cow, SA Taxi, faced severe structural challenges that would not be easily overcome in the short to medium term.

Factors such as fuel prices, vehicle price increases, interest rate hikes, low commuter volumes and a lack of fare increases diminished the industry's profitability.

The after-effects of Covid-19 and load shedding also negatively impact overall economic and commuter activity.

Figures released by the Automotive Business Council (Naamsa) reveal that the new vehicle market suffered a sharp 11.7% drop in March, with sales of 44 273 units.

This decline has had a significant impact on the industry with the year-to-date sales being down by 5.3% in the first quarter 2024 compared to the same period last year.

In contrast, used car sales increased 4.6% year-on-year, with 17 000 more units sold in 2023 than in 2022, according to a report by AutoTrader.

Ultimately, motorists spent R146.5bn on used cars in 2023, which indicates a year-on-year increase of more than R10bn.

BUSINESS REPORT