Last year November Biznews’ Alec Hogg caught up with Capitec CEO Gerrie Fourie in London. Fourie was travelling through updating shareholders (18% global holding) after a tour to California checking out a tech incubator that supports financial sector startups. Fast forward four months later and it shouldn’t come as a surprise that the group has announced its first steps into international markets. The deal is with Cream Finance, a short-term consumer loans group with an Eastern European bias. Capitec will acquire a 40 percent stake for €21m. Any South African can see first hand the disruptive nature of the group, and its share price is reflective, having quadrupled over the past three years to over R800. There’s no doubting a similar success will follow them on this overseas journey – the Naspers of the banking world? – Stuart Lowman
By Adiel Ismail
Cape Town – Capitec Bank is making its maiden venture into international markets, but investors have shown little enthusiasm if the bank’s share price is anything to go by.
South Africa’s fastest growing full service retail bank announced on Friday that it will purchase a 40% stake in Creamfinance for €21m, in a deal described as an “appropriate match” by Capitec CEO Gerrie Fourie.
However, the share price of Capitec was down 0.43% at R804.25 at the close of markets on Friday in Johannesburg, after recovering from the day’s low of R800.02.
Cream Finance uses sophisticated technology and advanced Smart Data credit scoring methods to provide online consumer loan products.
The European digital, consumer finance company, has an international footprint in Latvia, Poland, Czech Republic, Georgia, Denmark and Mexico.
Matiss Ansviesulis, CEO and co-founder of Cream Finance said they are inspired by the Capitec story of simplicity and transparency and they are looking forward to the partnership.
“We view the foreseeable future as a period to learn and gain experience in managing a remote business through a foreign partnership, while creating a new revenue stream in a diverse pool of foreign currencies and gaining insight into advanced technology and credit models that we may be able to use at home,” said Fourie.
He said the new partnership provides Capitec with an opportunity with a specific focus on advancing credit in the international and online environment.
Fourie said the prospect of entering international markets was a part of the group’s initial plan; and these intentions were echoed by chairperson Riaan Stassen as well as the management team.
“It was only a matter of allowing the bank to mature to a point where it was ready to take its first international step.”
Cream Finance’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, he 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,” explained Fourie.
Capitec expects profits for the year ended 28 February 2017 to be between 16% and 19% higher than the previous year. It expected its headline earnings per share to rise by between R32.33 and R33.17 a share from R27.87 a share in the prior year.
Capitec’s financial results will be published on 28 March. – Fin24
Source: http://www.fin24.com/Companies/Financial-Services/capitec-ventures-into-foreign-waters-20170324
Capitec makes international acquisition and partners with like-minded, entrepreneurial fintech company
From Capitec:
Capitec has announced its first venture into international markets by acquiring a strategic stake in a European digital, consumer finance company, Cream Finance Holding Limited (“Creamfinance”).
Creamfinance uses sophisticated technology and advanced Smart Data credit scoring methods to provide online consumer loan products. It has an international footprint in Latvia (where it was founded in 2012), Poland, Czech Republic, Georgia, Denmark and Mexico.
Capitec has for a while expressed its wish to grow internationally and the business model and management style of Creamfinance (innovative, cost conscious with a focus on simplicity) dovetail with that of its wholly-owned Capitec Bank. Capitec will purchase a 40% stake in Creamfinance for €21 million.
Gerrie Fourie, CEO of the Capitec group says the prospect of entering international markets was a part of the group’s initial plan. “These intentions were echoed by Chairman, Riaan Stassen as well as the management team. It was only a matter of allowing the bank to mature to a point where it was ready to take its first international step.”
Fourie says that the partnership provides 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. 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.”
He added that the transaction creates 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.”
Fourie says “The management team of Creamfinance, under the leadership of Matiss Ansviesulis and Davis Barons, is young and dynamic, and has established a new business, in complex markets, during a very short time by using digital technology.”
Matiss Ansviesulis, CEO and co-founder of Creamfinance says they are inspired by the Capitec story of simplicity and transparency and they are looking forward to the partnership.
The deal:
The investment will be done in three tranches at nine-month intervals, subject to certain performance measures being met.
- The first tranche for 19.43% in Creamfinance will be acquired for €6.7 million, while the second investment of €7.1 million will increase Capitec’s shareholding to 31.25%. The last tranche of €7.2 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 (“the put option”), which would increase Capitec’s interest to 49%. The put option can be exercised at the time of the 2nd or 3rd investment tranches, 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 two founders will each maintain an interest of at least 10% in Creamfinance. 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 Gerrie Fourie, CEO of Capitec.
Fourie and his management team believe this is an opportune investment given the digital offering as opposed to a bricks and mortar approach.
“We view the foreseeable future as a period to learn and gain experience in managing a remote business through a foreign partnership, while creating a new revenue stream in a diverse pool of foreign currencies and gaining insight into advanced technology and credit models that we may be able to use at home, ” Fourie concluded.
