Capitec raises stake in Avafin

Capitec, a prominent South African financial institution, has recently received approval from the South African Reserve Bank Prudential Authority to increase its ownership in Avafin Holding Limited, a global online consumer lending company. The move entails boosting Capitec's stake from 40.66% to 97.69% for an amount just under R500 million. Gerrie Fourie, the CEO of Capitec, highlighted that the decision to elevate the shareholding was driven by a mix of geographic and revenue diversification strategies. Having initially acquired a 40% stake in Avafin several years ago, the opportunity to secure full ownership emerged, prompting Capitec to seize the chance to expand its presence beyond South Africa. Avafin currently operates in five markets, including Poland, Spain, Mexico, Czech Republic, and Latvia. The acquisition opens up avenues for Capitec to explore extending its product offerings to these territories. With a strong focus on funding and potential for introducing new services like term lending and banking activities, Capitec aims to enhance its market position in these regions. Reflecting on the tech-driven operations of Avafin, CEO Gerrie Fourie emphasized the value exchange between the two entities, noting that Capitec can learn from Avafin's agile and digital approach, while also leveraging its own strengths to bolster Avafin's offerings. Despite the imminent changes, Capitec anticipates minimal impact on its revenue streams in the short term. However, with enhanced control over Avafin, the company eyes strategic growth opportunities fueled by Capitec's robust deposit base and funding capabilities. In preparation for the acquisition's full execution, Capitec is navigating regulatory approval processes, with a keen eye on fulfilling requirements set by Poland's regulatory body. As the financial landscape evolves with the rise of digital disruption and artificial intelligence, Capitec remains proactive in embracing technology. With a significant digital footprint and a sizable client base engaged through digital platforms, Capitec has allocated substantial resources towards digital initiatives, positioning itself as a major player in the digital finance sector. CEO Gerrie Fourie emphasized Capitec's commitment to delivering value to its clientele through innovative digital solutions, underscoring the institution's prowess in the digital arena. Capitec's foray into global financial diversification through the acquisition of Avafin marks a strategic move towards expanding its market presence and enhancing its offerings across multiple territories. With a focus on leveraging technological advancements and adapting to evolving digital trends, Capitec aims to solidify its position as a frontrunner in the digital finance landscape.