Absa Invests in Peer-to-Peer Lender RainFin

RainFin, a South African peer-to-peer lending platform, has announced that Absa Bank have acquired a 49% stake in their business. The investment, cited to be in the tens of millions, will be utilised to support working capital, credit and risk expertise and access to liquidity as well as to grow the business and improve offerings.

Peer-to-peer (P2P) lending, also known as person-to-person lending or social lending, is a type of financial transaction which occurs directly between individuals or “peers” without the intermediation of a traditional financial institution.

According to Sean Emery, the CEO at RainFin, The investment comes at a time when there is a lot of movement in the global peer-to-peer industry from the UK and US to China and India. In the US, peer-to-peer lenders such as Lending Club and Prosper are enjoying triple digit growth and venture capital firms like Sequoia Capital and BlackRock are investing in the industry.

Emery said in a statement, “We have known for a while that we would need a partner to take RainFin to the next level, and chose Barclays Africa after a long search because it has a vision that aligns closely with ours. Barclays Africa’s support will enable us to offer exciting new products in areas such as supply chain finance, enterprise development funding, fixed asset purchases and even mid-sized corporate debt. It will also clear the way for us to expand into new markets.”

RainFin works by allowing any South African resident over the age of 18 to borrow and lend through the company. After passing a strict credit vetting process, borrowers can apply for loans of between R1,000 and R75,000 with a maximum repayment period of one year. Individual lenders can then invest between R100 and R500,000 across a portfolio of RainFin loans. Borrowers can specify the loan amount, the maximum interest they are willing to pay and the loan duration up to a year.

According to Absa, 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”.

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