deals

Budding Bank Adds to South African Deals Spree by Buying RainFin

  • Lebashe Financial Services to boost RainFin stake to 75%
  • Company is seeking to build black-owned bank ‘brick by brick’

Lebashe Financial Services is increasing its stake in RainFin (Pty) Ltd., a South African lender previously backed by Barclays Plc, as part of the closely held company’s ambitions of building a black-owned bank.

Johannesburg-based Lebashe will boost its holdings in RainFin by 24 percent to 75 percent for an undisclosed sum, the company said in an emailed statement on Thursday. RainFin, the largest peer-to-peer lender in South Africa, bought back the 49 percent held by Barclays’s South African unit, with Lebashe acquiring its 51 percent stake in February last year.

Gaining bigger control of RainFin gives Lebashe access to a business seeking to win market share from traditional banks by offering services via mobile phones and the internet to cut costs. The country’s biggest lenders have been criticized for not doing enough to extend credit and increase the participation of the majority black population in the economy.

The deal follows a series of transactions already concluded by Lebashe. This includes the purchase of 5.3 percent of Capitec Bank Holdings Ltd., the country’s fastest-growing bank, and a 3.2 billion-rand ($256-million) deal with technology group EOH Holdings Ltd. Companies have been selling to black investors as part of South Africa’s drive to reverse years of discrimination caused by white-minority rule, which ended in 1994. It also bought TSS Capital, an investment and corporate advisory boutique.

Lebashe is seeking to build a black-owned bank “brick by brick” either through growing existing businesses or making acquisitions, Warren Wheatley, the executive director of Lebashe, said in the statement. Lebashe manages assets of more than 8.5 billion rand, while RainFin currently holds an enterprise value of a 100 million rand.

The company’s rapid growth has enabled Lebashe to repay a loan it took from the Public Investment Corp., which manages state-employees pensions, to buy shares in Capitec. It also holds a stake in 4 Africa Exchange, a new South African bourse, and Aluwani Capital, an investment management company.

“Our partnership with a number of stakeholders in financial services has been a fruitful one and we intend to continue in this vein,” said Wheatley.

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