(Bloomberg) -- Transaction Capital Ltd., which funds the purchase of about 650 South African minibus taxis a month, plans to dig deeper into its customer base by facilitating transactions by drivers and owners.
More than 15 million commuters use 250,000 minibuses across South Africa, according to data compiled by Transaction Capital from Statistics South Africa and other logistics and government entities. That makes the vans the most popular form of transport in the continent’s most industrialized economy, outstripping buses and trains. The industry is worth 50 billion rand a year ($3.6 billion), according to the Johannesburg-based company
To continue serving the country’s rapidly urbanizing population, the aging fleet is in need of an upgrade, giving Transaction Capital the opportunity to expand its SA Taxi division from finance and insurance to repairs and auto parts, as well as vehicle sales, Chief Executive Officer David Hurwitz said in an interview on Tuesday.
“There’s a big drive to move into all these other initiatives,” he said. One of these is being built around a loyalty program for fuel, backed by Royal Dutch Shell Plc’s South African unit, where taxi operators use cash rewards to make daily transactions, Hurwitz said.
Shares Gain
The loyalty program is being applied in other SA Taxi units, helping operators score rewards from the purchase of parts, which will underpin the creation of a business for debit and credit transactions, the CEO said. SA Taxi has provided almost 22 billion rand in loans to minibus taxi operators since 2008 and has 30,000 customers in its 10 billion-rand book.
The lender is also planning to expand its dealership network next year after selling a 25 percent stake in SA Taxi to the South African National Taxi Council for 1.7 billion rand. The deal will also connect into Santaco’s network, helping the business sell goods and services such as refurbished vehicles, spare parts and insurance.
Shares in the company were little changed in Johannesburg on Wednesday after rising 4 percent the previous day. Transaction Capital, which also has a financial technology business that helps customers in South Africa and Australia lower their risks, earlier reported an 18 percent increase in core earnings per share before one-time items for the year ended in September.
The stock has gained 13 percent this year, compared with a 14 percent slide in the FTSE/JSE Africa All-Share Index.
(Updates last paragraph with year-to-date share performance.)
To contact the reporter on this story: Roxanne Henderson in Johannesburg at rhenderson56@bloomberg.net
To contact the editors responsible for this story: Stefania Bianchi at sbianchi10@bloomberg.net, Vernon Wessels, Liezel Hill
©2018 Bloomberg L.P.
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