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Wealth and Investment

Standard Bank drives progress in South Africa’s taxi industry

19 Nov 2018

Country
South Africa
Year
2018
Sector
BEE
Business Unit
Investment Banking
Standard Bank acted as Financial Advisor, Transaction Sponsor, Lead Mandated Arranger and Co-Funder to longstanding client SA Taxi on their recent 25% equity partnership transaction with the South African National Taxi Council (SANTACO).

Background to the deal

SA Taxi and SANTACO have engaged over several years to formalise the minibus taxi industry’s participation in the revenue streams of the industry value chain, and to achieve meaningful and sustainable commercial benefits for industry participants.

SA Taxi provides finance, insurance and other allied services to entrepreneurs who operate minibus taxis and may not otherwise have access to credit from traditional banks, ultimately helping to improve the safety of public transport in South Africa.

Since inception, SA Taxi has facilitated the creation of over 76 000 black-owned SMEs through providing access to financing minibus taxis as an income generating asset. SA Taxi’s unique market position enhances its ability to have a meaningful impact through inclusive economic growth, SME empowerment and economic transformation.

Standard Bank’s role in the deal

Standard Bank provided strategic advisory support and structuring on this R1.7 billion transaction.  We were able to utilise our balance sheet to support the deal with a meaningful funding participation, while Transaction Capital  provided some de-risking through financial guarantees.

Our successful track record in structuring and executing landmark transactions allowed us to facilitate initiatives aimed at ensuring that broader industry participants benefit from the deal at all levels of the established ownership structure.

This kind of backing from a formal sector organisation in the informal market is a first in the country, further demonstrating Standard Bank’s commitment to facilitating unique and ground-breaking deals for our clients, enabling them to further their own growth and that of the economy.

By providing strategic advice, the right connections, expertise and our balance sheet, we are enabling SA Taxi to support an entirely black-owned industry, with black empowerment benefits. 

Promoting empowerment and growth

Approximately R1 billion of the net proceeds received from the deal were used by SA Taxi to settle external and shareholder debt, with the remainder retained by SA Taxi to continue investing in organic and acquisitive opportunities.

A transaction of this scale promotes investment which leads to broad-based meaningful participation by black stakeholders, creating a framework for wide-reaching initiatives that will grow and support the sustainability of the minibus taxi industry at every level into the future.

More importantly, it will drive the progress of our taxi industry and the millions of South Africans who depend on it every day, and we are proud to be associated with this ground-breaking initiative.