RainFin, a start-up promising to disrupt the financial services sector by allowing credit-worthy South Africans to engage in person-to-person lending, cutting out the banks in the process, has sold 49% of its equity to … a bank. The Cape Town-based company has sold the equity to Barclays Africa for an undisclosed sum.
The deal, RainFin says, should help boost what it calls the “emerging sector of lending exchanges and social lending in South Africa”.
RainFin, which is headed by CEO and co-founder Sean Emery, promises higher returns to lenders and better interest rates to borrowers than traditional financial services institutions.
Its online platform links people who need to borrow money with people who have money to lend. Borrowers can access funds at lower interest rates and with better terms and conditions than they could through a bank.
In a statement, Emery says the deal will give Barclays Africa a foothold in the continent’s fast-growing peer-to-peer lending market.
According to RainFin, the US peer-to-peer market, led by the Lending Club and Prosper, is enjoying triple digit growth rates and has attracted interest from global venture capital firms, including Sequoia Capital and BlackRock.
“However, the deal between RainFin and Barclays Africa is unique to the previous deals in this space as it is structured as a direct equity investment by a global bank into a peer-to-peer player,” it says.
The company says banks, hedge funds and institutional investors are all exploring ways to collaborate with peer-to-peer lenders. “City Group, Capital One, Bank of Montreal and Deutsche Bank have all recently started buying up loans originated through these platforms, with Morgan Stanley’s wealth management division in the US also investing about US$100m into peer-to-peer loans to date.”
It says the Barclays Africa investment allows it to start developing its corporate product range, which will soon include supply chain finance, enterprise development funding, fixed asset purchases and mid-sized corporate debt products. — (c) 2014 NewsCentral Media
- Read more: RainFin: loans without banks (TechCentral) and Banking without banks (The Economist)