South African retail group Pepkor Holdings plans to combine its financial-technology subsidiary Flash with payments platform Shop2Shop, forming a larger merchant-services and fintech business focused on the country’s informal economy.
Under the proposed transaction, Pepkor will obtain a controlling 57.1% interest in the combined company, provisionally known as FintechCo. The retailer will subscribe for R1.57 billion in new Shop2Shop shares and transfer its full ownership of Flash, valued at R10.6 billion, in exchange for additional equity. The deal places the combined company’s total equity value at approximately R21.3 billion.
The new platform will bring together Shop2Shop’s merchant and payment network with Flash’s digital products and financial services. Pepkor said the combination would create an integrated offering covering cash management, electronic payments, digital products and other services used by informal traders.
The transaction strengthens Pepkor’s position in South Africa’s township and rural markets, where many consumers and small businesses continue to depend heavily on cash. Retailers, banks and fintech companies are increasingly targeting this segment as they search for growth beyond the established formal retail market.
Pepkor also intends to pursue a separate stock-market listing for FintechCo over the medium term. The company believes such a listing could unlock additional value for shareholders while diversifying earnings from its informal-market operations
