Nutun Limited · JSE:NTU
Nutun — Transaction Capital — Merger or Acquisition (September 2020)
27 slides from Nutun's merger presentation, September 2020
Slide 1: A Non-Controlling Acquisition of 49.9% in WeBuyCars
T R A N S A C T I O N C A P I TA L A NON- CONTROLLING ACQUISITION OF 49.9 % IN WeBuyCars 2020 SEPTEMBER
Slide 2: Transaction Capital
Transaction Capital
Slide 3: Transaction Capital subscribes for a non-controlling 49.9% in WeBuyCars
TRANSACTION CAPITAL SUBSCRIBES FOR A NON-CONTROLLING 49.9% IN WeBuyCars 2 A QUALITY BUSINESS WITH HIGH CASH CONVERSION RATES & STRONG ORGANIC GROWTH PROSPECTS EARNINGS ACCRETIVE CASH DEPLOYMENT INTO A RELEVANT & SCALABLE BUSINESS WITH POTENTIAL TO GROW IN VALUE Purchase consideration 3 ¹ Cash (R1.12
Slide 4: Transaction Capital
Transaction Capital
Slide 5: Evolution of WeBuyCars into a leading market participant
EVOLUTION OF WeBuyCars INTO A LEADING MARKET PARTICIPANT 4 ENTREPRENEURIAL CULTURE | INVESTMENT IN EXPANSIVE INFRASTRUCTURE | BUILDING A TRUSTED BRAND | UNIQUE E-COMMERCE TECHNOLOGY 2001 HIGHLIGHTS AS AT 31 MARCH 2020 2001 2001 - 2010 • WeBuyCars founded by van der Walt brothers • Located in Pretori
Slide 6: WeBuyCars positioning statement
WEBUYCARS 5 POSITIONING STATEMENT Sellers receive a fair offer price, Entrepreneurial, founder-led & proudly South African; driven by proprietary market data (artificial intelligence) IS SOUTH AFRICA’S an innovator amongst numerous participants in the used with immediate cash settlement. vehicle seg
Slide 7: Entrepreneurial management team who are co-invested
ENTREPRENEURIAL MANAGEMENT TEAM WHO ARE CO-INVESTED 6 FOUNDERS ARE MATERIALLY INVESTED & ACTIVELY INVOLVED EXPERIENCED MANAGEMENT TEAM ASSEMBLED OVER MANY YEARS BY THE FOUNDERS FAAN VAN DER WALT DIRK VAN DER WALT CHRIS REIN KONRAD FLEISCHHAUER Chief Executive Officer Chief Strategy Officer Chief Fin
Slide 8: Financial performance
FINANCIAL PERFORMANCE 7 A HIGH GROWTH BUSINESS THE INVESTMENT IN WeBuyCars WILL ACCELERATE OPPORTUNITY FOR WeBuyCars TO ▲UNIT ECONOMICS PER ESTABLISHED INFRASTRUCTURE ROBUST TRANSACTION CAPITAL’S GROWTH RATE VEHICLE SOLD FROM GREATER TAKE-UP RATE OF F&I PRODUCTS1 FACILITATING OPERATIONAL LEVERAGE BA
Slide 9: Operational performance
OPERATIONAL PERFORMANCE 8 SIGNIFICANT GROWTH ACHIEVED CAGR 2017 to 2020 Vehicles sold per year ▲ 58% Vehicle supermarket visits per year1 ▲ 42% Advertising expense per vehicle ▼ 11% 1 928 1 937 Robust stock turn at <30 days resulting in high cash conversion rates 1 661 1 530 25.3 24.1 24.6 STRONG CO
Slide 10: Used vehicle market context: vehicle parc
USED VEHICLE MARKET CONTEXT & ENVIRONMENT 9 USED VEHICLE INDUSTRY IS RESILIENT, DEFENSIVE & GROWING DESPITE SOUTH AFRICA’S ECONOMIC CLIMATE SOUTH AFRICA’S VEHICLE PARC¹ IN SOUTH AFRICA THERE ARE 10.8 MILLION VEHICLES1 VEHICLE PARC GROWING DESPITE NEW VEHICLE SALES ▼OVER LAST 10 YEARS • Personal vehi
Slide 11: Used vehicle market context & environment
USED VEHICLE MARKET CONTEXT & ENVIRONMENT 10 USED VEHICLE MARKET IS RESILIENT & GROWING DESPITE DIFFICULT ECONOMIC ENVIRONMENT USED VEHICLE SALES PER YEAR ~1.2 MILLION (9 year CAGR ▲ 3.8% | 5 year CAGR ▲1.7%) • USED VEHICLE SALES ARE DRIVEN BY: NEW VS USED VEHICLE SALES CAGR › Economic environment ▼
Slide 12: Used vehicle industry is large & highly fragmented
USED VEHICLE MARKET CONTEXT & ENVIRONMENT 11 USED VEHICLE INDUSTRY IS LARGE & HIGHLY FRAGMENTED LARGE & HIGHLY FRAGMENTED MARKET WITH VARIOUS PARTICIPANTS & OPERATING MODELS Rental companies/ Dealers dealerships/banks DEALERS | GROUPS VS INDEPENDENT Stockholder Platform • Stockholders with inventory
Slide 13: Global listed peers
GLOBAL LISTED PEERS 12 A MIX OF MARKET PARTICIPANTS INCLUDING ONLINE PLATFORMS; MARKET PLACES; FRANCHISE DEALERS; E-COMMERCE WITH VEHICLE SUPERMARKETS WeBuyCars BUSINESS MODEL UNIQUE IN SA WITH COMPARABLE INTERNATIONAL PEERS 1 Advertising Europe Revenue Units sold cost as % Advertising 2019 (US$) (‘
Slide 14: WeBuyCars stacks up well against comparable international peers
WeBuyCars STACKS UP WELL AGAINST COMPARABLE INTERNATIONAL PEERS 13 PROFITABILITY SURPASSES COMPARABLE PEERS, SUPPORTED BY EFFICIENT INVENTORY MANAGEMENT & EFFECTIVE ADVERTISING SPEND • Hybrid model including • Hybrid model including • Hybrid model including • Fully online e-commerce & physical infra
Slide 15: E-commerce market context & environment
E-COMMERCE MARKET CONTEXT & ENVIRONMENT 14 E-COMMERCE PENETRATION IN SOUTH AFRICA IS DRIVING GROWTH ESTIMATE THAT E-COMMERCE ADOPTION IN SOUTH AFRICA HAS LEAP-FROGGED 5 YEARS DUE TO COVID-19 SIGNIFICANT OPPORTUNITY FOR E-COMMERCE DISRUPTION IN SOUTH AFRICA WeBuyCars IS WELL POSITIONED TO GROW ITS E-
Slide 16: WeBuyCars market positioning: competitive advantages
WEBUYCARS | MARKET POSITIONING 15 COMPETITIVE ADVANTAGES 2. ARTIFICIAL INTELLIGENCE (AI), ANALYTICS & LEAD GENERATION • AI applied to › Ensure vehicles bought & sold at a fair price › Adjust pricing according to value & demand, preserving margins & high stock turn • Lead generation to target high-qu
Slide 17: Transaction Capital
Transaction Capital
Slide 18: Transaction Capital's investment criteria
TRANSACTION CAPITAL’S INVESTMENT CRITERIA 17 CRITERIA APPLIED BY TRANSACTION CAPITAL WHEN CONSIDERING ITS NON-CONTROLLING INVESTMENT IN WeBuyCars WeBuyCars is a well established, entrepreneurial, BUSINESS MODEL owner-managed business with robust organic MARKET POSITION ✓ Scalable business model grow
Slide 19: Rationale: high quality standalone business with strong organic growth prospects
RATIONALE|HIGH QUALITY STANDALONE BUSINESS WITH STRONG ORGANIC GROWTH PROSPECTS 18 RATIONALE VALUE CREATION | WeBuyCars’s GROWTH OPPORTUNITES • Favorable structural market conditions • WeBuyCars › Significant position in resilient SA used vehicle market › High quality business INCREASE VOLUMES ENHAN
Slide 20: Group portfolio mix
GROUP PORTFOLIO MIX 19 ILLUSTRATIVE EXAMPLE ASSUMING TRANSACTION CAPITAL OWNED A NON-CONTROLLING 49.9% OF WeBuyCars IN FY18 & FY19 COMPOSITION ACCRETIVE CASH DEPLOYMENT CONVERTING INTEREST INCOME OF EARNINGS ON UNDEPLOYED CAPITAL INTO OPERATING EARNINGS ACTUAL ACTUAL ADJUSTED FOR INVESTMENT IN WeBuy
Slide 21: Transaction Capital group structure: pre-investment in WeBuyCars
TRANSACTION CAPITAL GROUP STRUCTURE | PRE-INVESTMENT IN WeBuyCars 20 GROWING EARNINGS BASE BY EXPANDING EXISTING TOTAL ADDRESSABLE MARKET & ENTERING ADJACENT MARKET SEGMENTS TRANSACTION CAPITAL SA TAXI TRANSACTION CAPITAL RISK SERVICES SERVICES CAPITAL SOLUTIONS Collection services (SA & Australia)
Slide 22: Transaction Capital group structure: new growth vector
TRANSACTION CAPITAL GROUP STRUCTURE | NEW GROWTH VECTOR 21 GROWING EARNINGS BASE BY EXPANDING EXISTING TOTAL ADDRESSABLE MARKET & ENTERING ADJACENT MARKET SEGMENTS TRANSACTION CAPITAL 49.9% 73.9% 100% WeBuyCars SA TAXI TRANSACTION CAPITAL RISK SERVICES SERVICES CAPITAL SOLUTIONS Collection services
Slide 23: Balance sheet position post investment in WeBuyCars
BALANCE SHEET POSITION POST INVESTMENT IN WeBuyCars 22 BALANCE SHEET WeBuyCars ILLUSTRATIVE ILLUSTRATIVE BALANCE SHEET HY20 BALANCE SHEET ADJUSTMENTS POST WeBuyCars INVESTMENT ASSETS • R560m accelerated bookbuild in June 2020 R20.6 billion • (~R900m) undeployed capital deployed accretively R22.1 bil
Slide 24: Transaction Capital
Transaction Capital
Slide 25: Transaction Capital
Transaction Capital
Slide 26: Glossary
GLOSSARY 25 AUS Australia Fihrst Net1 Fihrst Holdings (Pty) Ltd, a 100% owned subsidiary of TCRS ACCSYS Accsys, a 100% owned subsidiary of TCRS NPL Portfolios Non-performing consumer loan portfolios acquired by TCRS to be collected as principal Additional gross margin earned on value-added products
Slide 27: Disclaimer
DISCLAIMER 26 This presentation may contain certain "forward-looking statements" regarding beliefs or expectations of the TC Group & any investments made by the TC Group, its directors & other members of its senior management about the TC Group’s &/or its investments’ financial condition, results of
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