RainFin and The Lebashe Investment Group, which operates primarily in the financial services sector, have concluded a transaction whereby Lebashe will capitalize the business, partially exit the founding shareholders, and increase its stake to 75%.
Founded in 2012, RainFin has been a pioneer in disrupting the debt markets in South Africa. Its credit marketplace technology has been utilized by companies to raise debt funding from both traditional and non-traditional sources.
Lebashe, which is 100% black-owned and managed, will increase RainFin’s direct black ownership to over 75% through this transaction.
Earlier this year, RainFin established two divisions: one focusing on Corporate Debt infrastructure and the other on an SME Credit marketplace aimed at building an SME funding ecosystem.
The Corporate Debt division has partnered with 4 Africa Exchange, one of South Africa’s newly licensed stock exchanges, to provide technology and platform services to companies for raising debt directly from the market. This includes 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, which will focus on providing services to SME-focused funds.
“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. 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 of The Lebashe Investment Group. “As an investor in RainFin, we have come to know the RainFin team, their ethos, and the excellent strategic fit between RainFin’s unique value proposition and potential to scale, and Lebashe’s vision to build a pre-eminent black-owned financial services business that is accessible to all.”
Sean Emery, RainFin CEO, added, “As part of the initial Lebashe investment, we successfully piloted a R40m SME fund in our SME Credit marketplace division, called Texmex, and identified opportunities to scale this fund with additional capital for various target segments of SMEs. 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 a R1bn SME fund, and as such, we need to have in excess of R200m capitalization on our balance sheet. This transaction assists us in our path to achieving this. Additionally, this transaction enhances RainFin’s capabilities for expansion and will allow us to accelerate our growth strategy,” Emery continued.
Both RainFin and Lebashe believe this transaction will have a profoundly positive effect on their ability to service the SME segment across South Africa and Africa.
