African Rainbow Capital targets fintech ecosystem with R1.5 billion transaction

ARC Financial Services, a subsidiary of billionaire Patrice Motsepe’s African Rainbow Capital, has entered into agreements to acquire Crossfin Technology Holdings, as part of a consortium led by the Ethos Mid-Market Fund I, in a transaction valued at R1.5 billion. 

ARC Investments is a Limited Partner in an en-commandite partnership, the ARC Fund Partnership SA. ARC FSH is 50.1% owned by African Rainbow Capital Proprietary Limited and 49.9% owned by the ARC Fund, which is the vehicle holding the assets within ARC Investments, the listed entity. 

ARC FSH will acquire 37.33% of Crossfin, via the consortium, for a consideration of R600 million which will assume a combination of acquisitive capital from the existing shareholders and growth capital for identified portfolio transactions. 

The group said it commits to providing acquisition and growth capital in a R1.5 billion transaction. “The transaction includes the provision of acquisition and growth capital to enable Crossfin to deliver on its vision of investing in fintech solutions in select markets on the African continent.” 

Crossfin said it backs companies that focus on solving specific everyday pain points, not adequately covered by existing products in the market. It operates in industries that are set to benefit from the growing trend towards the usage of digital payments over cash. 

“Crossfin’s portfolio and healthy partner ecosystem create exciting opportunities to integrate a broad suite of financial products and services to support local merchants and consumers on multiple levels,” it said. 

Currently, its portfolio processes over 134 million card and 20 million mobile-enabled payment transactions per annum with an aggregated value of over R79 billion. 

“The transaction strongly positions Crossfin to leverage new technologies as they emerge,” said ARC Financial Services, adding that the deal is aligned to ARC Investments’ ambition to establish an ecosystem of fintech-related businesses. 

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