Capitec makes major move overseas in R283 million deal with online only lender
Capitec has made its first move into international markets by acquiring a 40% stake in European online lender, Creamfinance, for R283 million.
Creamfinance is an online consumer lender that has an international footprint in Latvia (where it was founded in 2012), Poland, Czech Republic, Georgia, Denmark and Mexico.
Group CEO Gerrie Fourie said that the strategic partnership will provide Capitec with an “opportunity to gain experience in entering and operating in foreign countries”, with a specific focus on advancing credit in the international and online environment.
“It is an appropriate match. Creamfinance’s online business model has been developed in such a way that new countries can be entered swiftly and efficiently, requiring limited investment in local infrastructure,” Fourie said. “Capitec’s focus will be to provide strategic input and give access to skills in key areas such as information technology, credit management and the development of term loan products, thereby assisting Creamfinance to further grow its international business.”
Fourie added that the transaction will also create a potential revenue source “from a diverse pool of foreign currencies”.
“Consumer fintech is a high growth industry with potential to offer sustainable growth and internal capital generation,” the CEO said.
Capitec released the details of the deal, which is will be done in three tranches at nine-month intervals, subject to certain performance measures being met, with a forward option to increase its holding to 49%.
- The first tranche for 19.43% in Creamfinance will be acquired for just over R9.1 million,
- The second investment of R9.7 million will increase Capitec’s shareholding to 31.25%.
- The last tranche of R9.85 million will bring Capitec’s stake to 40%.
Existing shareholders of Creamfinance have the option to sell a further 9% shareholding to Capitec at a maximum cost of €5.4 million, which would increase the local bank’s interest to 49%.
The option to increase its holding can be exercised at the time of the second or third investment tranches, Capitec said, but remains subject to Creamfinance meeting the performance measures for the relevant tranches.“It is not the intention for Capitec to become a controlling shareholder,” the group said.
The two Creamfinance founders will each maintain an interest of at least 10% in their company. The balance of the shares is held by Whirlon Investments Limited, Basic Group Limited and other small shareholders.Capitec will initially have the right to nominate one director on the board of Creamfinance.
This position will be held by André du Plessis, CFO of Capitec. This will be increased to two after the second investment tranche, which position will be filled by Fourie, Capitec said.
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