JSE-listed financial services company Transaction Capital has broadened its hunt for acquisitions to include offshore companies as it battles to find suitable entities domestically.
This means Transaction Capital is still prepared to expand overseas despite pulling out of a joint venture, Qarar, in Saudi Arabia last year. Successful acquisitions offshore could help Transaction Capital earn foreign currency, which could benefit the group, especially with a weakening rand.
"The one change in our thinking around acquisitions is that we will look offshore. Although there are opportunities locally, to date they haven’t had the scale we’re looking for," the company said in its latest annual report.
"Expanding internationally allows us to diversify risk in terms of our current exposure to a single market. Our business model in the risk services division is exportable in that we can apply proven and efficient operating and cost structures, as well as our data and analytics capabilities to similar businesses in other countries."
Transaction Capital provides asset-backed finance and owns SA Taxi, which funds the acquisition of minibuses.
It is also involved in credit risk management, debtor management, collection, and owns businesses such as MBD, Principa and Rand Trust.
Transaction Capital said it had excess capital of about R800m for acquisitions, development and organic growth in the year ended-September.
The company said its executive team had travelled extensively in the 2015 financial year in search of deals.
It said it wanted to team up with founding shareholders who would remain executives in the businesses acquired by it. This was to ensure that it managed risk by aligning its interest with that of the owners and managers of the target companies.
With its organic growth strategy, Transaction Capital is investing in building a minibus panel-beating shop in SA, a move that will allow it to offer finance, insurance, panel beating, refurbishment and mechanical services to the minibus industry. This will be part of the SA Taxi business.
SA Taxi also operates a business called Taximart, which refurbishes repossessed vehicles. The panel-repair facility should be operational next month. SA Taxi has also started financing sedans to operate as metered taxis and will develop its own cab app similar to that of cab business Uber.
The annual report showed that in the year, CEO David Hurwitz earned a total remuneration of R5.5m, less than a percentage increase compared to the previous financial year.
The package included a basic salary of R2.5m, an annual incentive bonus of R2.2m and benefits of about R860,000.