The Prudential Authority of the South African Reserve Bank has granted Capitec approval to increase its stake in international online consumer loan company, Avafin Holding Limited (Avafin), from 40.66% to 97.69%. The deal, which is estimated to be worth €26.3 million, is still subject to clearance by the Financial Surveillance Department of the South African Reserve Bank and the Polish Competition Authority.
Capitec, which is evolving into a digital bank, communicated to its shareholders that a primary reason for acquiring the majority interest in Avafin is the strong cultural fit. Capitec highlighted that Avafin, much like itself, is a smaller competitor breaking into a market dominated by larger players, emphasizing niche client solutions by leveraging efficient, scalable technology and solid credit risk management principles.
Capitec noted that another key benefit of this transaction is geographic diversification as Avafin offers online consumer loan products in Poland, Czechia, Latvia, Spain, and Mexico.
Capitec initially acquired a 40% stake in Cream Finance Holding Limited, now named Avafin, a company based in Cyprus, back in 2017. Capitec highlighted that this acquisition has allowed the bank to gain experience in the international online consumer credit market, providing the chance to manage operations and risks in foreign markets while diversifying their income sources beyond South Africa.
Following this transaction, Avafin’s management will maintain their residual interest in the business, consistent with Capitec’s belief in management ownership. Capitec, headquartered in Stellenbosch, South Africa, explained that Avafin aligns closely with its client-centric retail business model and is well-positioned for future growth.
