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‘Zebra Cabs isn’t in competition with Uber’

Transaction Capital in acquisitive mode, planning R2bn bond issue.

Zebra Cabs, the metered taxi business operated by Transaction Capital subsidiary SA Taxi, is reportedly not in competition with Uber.  

“Just as we help a minibus taxi operator buy his car, finance his car and provide him with data services, we’re doing the same in the metered tax business. We do also help him attract customers into his taxi through various means – only one of them is app. We also have corporate sales and call centres,” said David Hurwitz, CEO of Transaction Capital.

He added that many Zebra Cabs operators run the company’s own app, in addition to others such as Uber and Taxify.

Zebra Cabs services – launched in Johannesburg earlier this year – is likely to expand to Cape Town and Durban in the coming year, as the company plans to have 3 000 metered taxis on its books by 2020.

Citing metered taxi penetration statistics, which show that Johannesburg, Cape Town and Durban have 1, 1.5 and 0.5 taxis per 1 000 people, respectively, Hurwitz said there is “great scope” for the business to grow in South Africa. London has ten taxis per 1 000 people – the most anywhere in the world.    

Hurwitz said SA Taxi’s minibus taxi business remains resilient due to the vertically-integrated nature of the business, which comprises dealerships, a refurbishment facility and data analytics services.

“Our taxi operators have, in this difficult environment, been able to settle their debts and our credit metrics have actually been getting better and better. The quality of our book is improving in this really difficult environment,” he said.

For the financial year ended September 30 2016, SA Taxi’s gross loans and advances increased by 15% to R7.15 billion. Its non-performing loan ratio improved to 17.4% from 18.2% and its credit loss ratio improved to 3.1% from 3.9%.

He said a significant increase in the country’s already-high unemployment rate of 27.1%, may affect the minibus taxi industry. Minibus taxi commutes account for around 66% of all public transport trips.  

Fears of a potential sovereign ratings downgrade saw SA Taxi raise R3.5 billion over the past 12 months.

“We were watching the way this potential downgrade played out around the country and we decided that we’re in the business of certainty and didn’t really want to take risk. So we prefunded the year by raising lots of external debt during the 2016 year, which will only be utilised in the 2017 year,” said Hurwitz.

Given that SA Taxi has fulfilled most of its debt requirements for the 2017 financial year, and Transaction Capital Risk Services is a non-capital intensive business, the group is in no rush to raise more debt.

Still, it is to establish a R2 billion domestic note programme in a bid to diversify its funding structures. The programme, which carries an A- credit rating from Global Credit Ratings, is likely to be listed on the JSE as TransCapital Investments in 2017.

The group, in acquisitive mode, is to deploy R500 million for 100% of Australia’s Recoveries Corporation Group and majority stakes in the Johannesburg-based RoadCover and The Beancounter, all of which will complement its existing businesses.

After the acquisitions, Transaction Capital said it would have R300 million in liquid cash on its balance sheet. 

The group grew headline earnings per share (Heps) by 17% to 80.6 cents and declared a dividend of 30 cents per share, up 36% from a year earlier.

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