Billionaire Motsepe Seeks to Shake Up South African Banks With TymeBy
African Rainbow Capital has a stake in fintech bank Tyme
Tyme’s South African bank license expected by end of September
African Rainbow Capital Ltd.’s banking partner is close to getting a license that it wants to use to challenge the dominance of South Africa’s biggest lenders.
The Commonwealth Bank of Australia has said it will sell 10 percent of Tyme, a Johannesburg-based lender that allows customers to access funds through their mobile phones, to billionaire Patrice Motsepe’s African Rainbow Capital after buying the business in 2015. Tyme was granted a provisional license by the South African Reserve Bank last year.
“The license is expected before the end of September,” Johan van der Merwe, co-chief executive officer of African Rainbow Capital, said in an interview in Johannesburg on Thursday. The regulator is looking at the cloud-based system that ARC’s fintech partner is using to make sure it works before granting the full license, he said.
South Africa’s four biggest banks, including Standard Bank Group Ltd. and FirstRand Ltd., haven’t had to face competition in the consumer market since Capitec Bank Holdings Ltd. started more than 15 years ago. Now, the central bank has three provisional licensees; Tyme, insurer Discovery Ltd. and the South African Post Office.
This comes as the country’s ruling party pushes for the creation of a state-owned bank to boost lending to the majority black population and businesses that the ruling African National Congress has said have been excluded from the banking system.
“The South African banking environment is due for a bit of disruption,” van der Merwe said. While Capitec has been able to play that role, the soon-to-be licensed lender will be a “disruption over and above that,” he said.
African Rainbow Capital plans to raise 4 billion rand ($303 million) selling shares in its investment unit to selected investors. The sale will be followed by a listing on the Johannesburg Stock Exchange next month that will give African Rainbow Capital Investments a market value of about 8.5 billion rand. The unit will have 2 billion rand in cash for future purchases, van der Merwe said.