Barclays buys into SA P2P market

Barclays Africa has acquired a 49% stake in local peer-to-to marketplace Rainfin. The investment was made to boost the emerging sector of lending exchanges and social lending in SA.

Barclays Africa has acquired a 49% stake in RainFin, a local peer-to-peer marketplace. This investment is set to give a major boost to the emerging sector of lending exchanges and social lending in South Africa.

We’re excited to have finalised this transaction with Barclays Africa after a long and thorough due diligence and negotiation. This shows that the peer-to-peer lending model has come of age in South Africa and this transaction brings the concept into the mainstream of the country’s financial services sector,” says Sean Emery the CEO of RainFin.

He adds: “We believe that the investment in RainFin will compliment Barclays Africa’s lending business in Africa while giving them a foothold in Africa’s fast-growing peer-to-peer lending market.

This transaction comes at a time when there is significant investor movement in the global peer-to-peer industry from the UK and US to China and India. The US peer-to-peer market, led by the Lending Club and Prosper, is enjoying triple digit growth rates and have attracted interest from global venture capital firms like Sequoia Capital and BlackRock as well as Google and other industry players. 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-2-peer player.

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 $100m into peer-to-peer loans to date. With the various hedge and pension funds starting to utilise this channel, the concept of peer-to-peer lending is starting to claim its place in the financial sector globally.

A spokesperson for Barclays Africa commented: “Evidence in developed markets suggests that lending exchanges are here to stay, and through this partnership with RainFin, we now have a front seat view on its development in South Africa and beyond. We believe that a well-structured, suitably regulated, scalable and secure peer-to-peer exchange will compliment and supplement our present lending channels.

Peer-to-peer lending globally has advanced significantly from its roots in personal lending. The products and services extend to all sectors of banking, from unsecured and secured loans to individuals and businesses to real estate lending and the corporate bond markets. The investment by Barclays Africa enables RainFin to start developing their corporate product range, which will soon include Supply Chain Finance, Enterprise Development Funding, Fixed Asset Purchases and Mid-sized Corporate Debt products.

We looked to bring a partner into our business that would be in a position to support us in our early growth phase. Barclays is a leading bank in Africa and bring with them significant expertise in financial services and credit risk management experience, along with a thorough understanding of building robust and secure technology platforms required to grow RainFin,” concluded Emery.

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