RainFin and The Lebashe Investment Group, which operates mainly in the financial services sector, concluded a transaction whereby Lebashe will capitalize the business, partially exit the founding shareholders and thereby increase its stake to 75%.
RainFin, founded in 2012, has been a pioneer of the disruption of the debts markets in South Africa, as its credit marketplace technology has been utilized by companies to raise debt funding from both tradition and non-traditional sources.
Earlier this year RainFin created two divisions – one with a focus on Corporate Debt infrastructure, and the other as SME Credit marketplace focused on building a SME funding ecosystem.
The Corporate Debt division has a partnership with 4 Africa Exchange, one of the new licensed stock exchanges in South Africa, to provide technology and platform services to companies to raise debt directly from the market in the form of technology-led self-origination, cost-effective arranging, book-building and debt private placement.
The SME Credit marketplace Division has established its own fund – the RainFin SME fund and will focus on providing services to funds that are SME focused.
“During the past year since our initial Lebashe investment into RainFin, we have collectively identified opportunities to significantly increase the capital available for Small and Medium Businesses across South Africa and beyond. In order to unlock these opportunities, RainFin needed to increase its operational capacity and scale its balance sheet. The Lebashe investment will allow the business to do this”, said Warren Wheatley, Executive Director for The LeBashe Investment Group. “As an investor in RainFin, we have gotten to know the RainFin team, their ethos and confirmed the excellent strategic fit between RainFin’s unique value proposition and potential to scale, and LeBahse’s vision to build a pre-eminent black owned financial services business, which is accessible to all.”
Sean Emery, RainFin CEO said: “As part of the initial Lebashe investment, we have successfully piloted a R40m SME fund, in our SME Credit marketplace Division, called Texmex and have identified opportunities to scale this fund with additional capital for various target segments of SMEs. In order to attract more capital into our SME funds, we need to increase our balance sheet to be at least 20% of the size of the funds we want to build.”
“We are targeting to build a R1bn SME fund and as such we need to have in excess of R200m capitalization on our own balance sheet– this transaction assists us in our path to achieving this. In addition, this transaction enhances RainFin’s capabilities for expansion and will allow us to accelerate our growth strategy”, added Emery.
LeBashe is 100% black owned and managed, which results in RainFin’s direct black ownership increasing to over 75%. Both RainFin and LeBashe believe this will have a profoundly positive effect on the ability to service the SME segment across SA and Africa.