SOUTH AFRICA – Capitec, a leading South African bank, has acquired a controlling stake in AvaFin, a leading B2C online lending platform to enhance its position in the digital lending space.
The acquisition solidifies Capitec’s commitment to providing innovative financial solutions to its customers.
The Prudential Authority of the South African Reserve Bank has since granted Capitec approval to increase its stake in the international online consumer loan company, from 40.66% to 97.69%.
The deal, which is estimated to be worth €26.3 million (US$28.533m), is still subject to clearance by the Financial Surveillance Department of the South African Reserve Bank and the Polish Competition Authority.
“Capitec’s values align seamlessly with AvaFin’s mission, making this acquisition a natural fit for both organizations. The collaboration represents a strategic alignment that will undoubtedly create value for both companies and contribute to the continued evolution of the digital lending sector,” Patrick Köck, CEO of AvaFin stated.
“Julian Ostertag and the Drake Star FinTech team played a pivotal role in facilitating the transaction by leveraging their extensive market experience, strategic guidance and unwavering commitment to ensure a seamless process.”
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.
Drake Star Partners acted as the exclusive financial advisor to the selling shareholders of AvaFin on this transaction.
“We are pleased to have supported AvaFin on this transaction,” said Julian Ostertag, Managing Partner at Drake Star Partners.
“AvaFin’s proven track record in online lending, coupled with Capitec’s strong financial foundation, positions both companies for continued success and growth in the digital financial services landscape.”
AvaFin stands as a leading digital non-bank consumer lender, specializing in the provision of near- and sub-prime loans across five countries.
The company operates through an integrated business model, emphasizing the utilization of best-in-class technology, efficient credit operations, and robust marketing capabilities.
Demonstrating a strong technological focus, AvaFin maintains dedicated risk and IT development teams.
As an international player, AvaFin has a presence in six countries and boasts a workforce of over 330 employees. With a history spanning over a decade, the company has solidified its position as a trusted online lender within the sector.
AvaFin’s expertise lies in delivering consumer loans, showcasing its commitment to providing reliable financial solutions tailored to the evolving needs of its clientele in the digital lending landscape.
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