Transaction Capital makes inroads beyond taxi finance
Insurance, vehicle retail and automotive parts distribution now make up 37% of total revenues
Transaction Capital’s minibus taxi financing business might be a cash-cow for now, but the non-interest income side of the business is something to watch.
Divisions contributing non-interest income, which include insurance, vehicle retail and automotive parts distribution, already make up 37% of SA Taxi’s total revenues. CEO David Hurwitz expects this to increase to 50% soon.
SA Taxi is Transaction Capital’s subsidiary focused solely on the minibus taxi industry, but it’s still largely known for its financing activities. The other operations are growing at a rapid pace, though.
The insurance division now attracts taxi owners who aren’t forced to have insurance as their cars have been paid off. This shows SA Taxi is now the insurance company of choice in taxi circles. Profit prospects are good as SA Taxi has its own repair and refurbishment facilities to keep costs low.
Another business to watch is the debt-collection and rehabilitation operation, Transaction Capital Risk Services (TCRS). It buys non-performing loan books from banks and other lenders at a fraction of their face value and collects from non-paying customers.
It recently bought 13 books in SA with a face value of R2.1bn for just R404m. After other book purchases, TCRS sits with remaining collections of about R3.6bn.
How does TCRS expect to collect this debt if it was so difficult for lenders that they opted to sell it for a fraction of its value? Hurwitz seems to have a strategy. He says the company only buys portfolios where it has enough data on the debtors, and the likelihood of payment is greater than not. Then all there is to do, as he puts it, is “work those people hard”.