Absa Bank, a wholly owned subsidiary of Barclays Africa Group, has announced that it will sell its 49% stake in RainFin to the company’s founders and management.

RainFin is a South African lending marketplace that connects lenders directly with high-quality individual, business or corporate borrowers

This transaction “will allow RainFin, under the control of its founding shareholders, to focus on building strategic partnerships with multiple financial institutions and wholesale capital providers, which is aligned to our growth strategy”, RainFin said in a statement.

Meanwhile, according to a statement issued by Absa: “This transaction allows for Absa to focus on its core operations”.

Absa acquired the 49% stake in 2014, saying that the deal is a move to stay on top of the peer-to-peer lending market – a market which the bank believes will be “here to stay”.

RainFin was launched in 2012, in response to the increased cost of traditional lending.

The company pioneered a viable alternative for quality borrowers looking for access to finance and lenders looking for returns that are higher than fixed deposits or the stock market.

“As a core shareholder in RainFin during our foundation years, Absa have added significant value to our business and the foundations upon which it is built. Their contribution and scrutiny in terms of our regulatory, compliance, legal and operational governance has put us in a very strong position to grow way beyond the initial personal loan (peer-2-peer) space,” RainFin said.

“RainFin is now in a position to offer a full credit marketplace to all sizes of business, from SMEs to mid-size corporates and even to municipalities and state owned entities. Although at times it was frustrating to have such a large bank as a shareholder, having our business operations exposed to the rigors of complying with all the bank’s standards in terms our activities to facilitate lending activities on their behalf, has been a major part of our successful development as South Africa’s only Credit Marketplace with both FSB and NCR accreditation,” the company added.

Fintech peer-to-peer funding institution said that the purchase of the Absa shares better positions them to engage and work with multiple financial institutions or wholesale capital providers.  

“We are also expanding our service offering to incorporate a corporate and SME credit marketplace with secured and unsecured loans.”

RainFin is looking to capitalise on the rapid move into lending by wholesale capital providers.

More and more, asset managers and pension funds are becoming comfortable with direct exposure to debt, with a view to build their own pool of interest-income assets, as opposed to participating in a bank’s debt offerings.

“We are confident that this trend will contribute to an exponential growth of credit marketplaces. Aligned to this, we are presently in discussions with a number of potential partners,” the firm said.

“Beyond working to conclude negotiations to secure lending mandates, we envisage that we will replace Absa’s equity position with other, more aligned, shareholders in the not too distant future,” RainFin said.