Read time: 3 minutes

SA’s Capitec expands into Europe with Avafin deal

By , Africa editor
South Africa , 12 Mar 2024
Gerrie Fourie, CEO of Capitec.
Gerrie Fourie, CEO of Capitec.

The Prudential Authority of the South African Reserve Bank has authorised Capitec's transaction to raise its stake in Avafin Holding Limited (Avafin), an international online consumer loan firm, from 40.66% to 97.69% for €26.3 million.

Capitec notified shareholders today that the deal is subject to clearance by the South African Reserve Bank's Financial Surveillance Department and the Polish Competition Authority.

Capitec, which has been steadily becoming a digital bank, told shareholders that key reasons for acquiring the controlling interest in Avafin include a strong culture fit. The bank claims, like itself, Avafin is a smaller challenger taking on large market leaders by focusing on niche solutions for clients through the efficient use of scalable, technology and sound credit risk management principles.

It added that the transaction gives Capitec geographical diversification. “Avafin provides online consumer loan products in Poland, Czechia, Latvia, Spain and Mexico,” said Capitec.

Capitec’s initially acquired 40% interest in Cream Finance Holding Limited (renamed Avafin), domiciled in Cyprus in 2017.

Today, it said: “The acquisition of a minority interest in Avafin in 2017 provided Capitec with the opportunity to gain experience in the international online consumer credit market, management of operations and risk in foreign markets and international diversification of Capitec's income sources.”

With the deal, Avafin management will continue to hold the residual interest in the business, in line with Capitec's philosophy of management ownership, said the bank.

The Stellenbosch-headquartered Capitec added: “Avafin is closely aligned to Capitec's client-centric retail business model and well positioned for growth.”

Daily newsletter