SA Taxi on Tuesday announced that it has secured R300-million in funding from Futuregrowth Asset Management, which will be used to provide financing to the company’s Zebra Cabs owner-driver scheme. By Staff Writer
SA Taxi, South Africa’s largest financier of minibus taxis, acquired Zebra Cabs metered taxis in 2015 as the certified developmental credit provider sought to expand its business activities into relevant adjacent markets.
Mark Herskovits, SA Taxi Capital Markets Director, explains that after 10 years in the minibus taxi industry, the company has been looking for opportunities to leverage its unique business model and underlying operational efficiencies, and determined that the point-to-point metered taxi industry offered the ideal synergies to scale effectively.
“We have developed a business model tailored to the unique characteristics of an industry often perceived as higher risk,” explains Herskovits.
And with key similarities between the factors driving the need for finance in the mini bus and metered taxi industries, SA Taxi believes this is a natural extension of the business and therefore an ideal area for growth.
“These two sectors don’t compete directly which makes it an ideal bolt-on business,” says Herskovits.
SA Taxi will now leverage the company’s vertically integrated and successful minibus taxi business model to revive the floundering metered taxi cab industry.
“In South Africa, the industry is a characterised by an old, poorly maintained fleet of vehicles and a lack of trust and transparency in pricing. We therefore feel that there is an opportunity to revolutionise the industry and also offer a suitable alternative to Uber, which is doing a great job at disrupting this sector, says Herskovits”
SA Taxi, in conjunction with Futuregrowth, are therefore offering owner-driver entrepreneurs who don’t want to operate mini buses and who may not have a credit record that enables them to access vehicle financing, the means to purchase a metered taxi, along with additional support in running their small business.
This initial funding is earmarked for expansion over a two-year period, with a primary focus on operations in Johannesburg.
“We will consider seeking additional funding sooner if required, but we first want to build scale in the key area of Johannesburg to achieve critical mass, before expanding operations to Cape Town and Durban. Our long-term goal is to have 3,000 Zebra Cabs on the road by 2020,” concludes Herskovits.