South African P2P Lending Startup Rainfin Acquires Stake In 4AX
Peer to peer lending has become an alternative source of funding for many entrepreneurs looking for investment and equally for investors looking to diversify their resources. Rainfin has used a crowdfunding model to disrupt the loan industry in South Africa and as a sign of its continued growth, it has concluded the acquisition of a tactical stake in South Africa’s 4 Africa Exchange Proprietary Limited (4AX).
Sean Emery, RainFin CEO, adds, “There is growing market demand for companies to have the tools to raise debt directly from the market. In essence, this would include, technology-led self-origination, cost-effective arranging, book-building and private placement, and supply expansion, i.e., increased supply of highly rated debt listings. The collective RainFin and 4AX offering is timely, in that there is a distinctive product-market fit.”
Rainfin has had a successful trajectory of growth signified by strategic partnerships. Their previous collaboration with ABSA gave them the necessary foundation to amass healthy lending volumes. At the time of ABSA’s exit in 2016, Rainfin was estimated to be daily processing loans of up to USD 83 K; nevertheless, the sale of their 49% stake gave Rainfin the freedom to approach other institutional lenders as well as asset managers and pension funds. This move opened the door for a 30% stake acquisition from LeBashe investment group in 2017 -for an undisclosed amount- allowing for a stronger presence in the financial services industry.
4AX is an alternative stock exchange that has opened the playing field facilitating greater involvement and access to a broader group of people than previously under the JSE.
Fay Mukaddam, 4AX CEO, says: “It is a long-standing fact that the debt market is inadequately serviced, a problem that it is not isolated to South Africa. The conclusion of this transaction will allow 4AX to build on the concept of crowdfunding, and a credit marketplace platform pioneered by RainFin, and significantly enhance that by bringing the offerings into a regulated world through alignment of the debt instruments issued by the RainFin platform and our listed regulated exchange.
This strategic partnership between 4AX and Rainfin means that they will merge comprehensive credit technologies with a broader debt platform. This will allow them to service “global conglomerates, government institutions, and state-owned enterprises.” Together the two behemoths will continue to disrupt the credit and financial services sector in South Africa as it undergoes its fourth industrial revolution.