Barclays Africa has acquired 49 per cent of South African peer-to-peer lending service RainFin, boosting the emerging social lending sector in South Africa.
RainFin provides an online marketplace for connecting creditworthy borrowers to lenders, giving users with an alternative to banks.
“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,” said Sean Emery, chief executive officer (CEO) of RainFin.
City Group, Capital One, Bank of Montreal and Deutsche Bank have all recently started buying up loans that originate from peer-to-peer lending, with Morgan Stanley’s wealth management division in the US also investing about US$100 million in 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,” the company said in a statement.
Barclays’ investment will allow RainFin to develop their corporate product range that will include supply chain finance, enterprise development funding, fixed asset purchases and mid-sized corporate debt products.
“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,” said a Barclays spokesperson.