Retail group will hold a 57.1% stake in the combined business as it targets growth in SA's informal merchant market.
Picture: Pepkor website
JSE-listed retail group Pepkor Holdings Limited has announced a major consolidation in South Africa’s informal merchant sector, combining its Flash business with fintech provider Shop2Shop to establish a preeminent merchant commerce and fintech platform valued at approximately R21.3 billion.
The merged entity, provisionally designated as “FintechCo” will process an aggregate annual throughput value exceeding R200 billion across both formal and informal economic markets.
Under the terms of the agreement, Pepkor will acquire a 57.1% controlling stake in FintechCo through a dual transaction:
- A cash subscription of R1.57 billion for newly issued shares in Shop2Shop, which will be utilised to settle Shop2Shop’s existing debt and relevant corporate obligations.
- The full equity contribution of 100% of Flash, valued at R10.6 billion, in exchange for new Shop2Shop shares.
The transaction serves as a core execution pillar in Pepkor’s strategy to accelerate expansion within its Informal Market Platform segment, creating a structured pathway toward a separate medium-term public listing for FintechCo.
Strategic integration across the value chain
The merger brings together two complementary operating platforms serving South African traders:
- Flash: Pepkor’s digital products and value-added services (VAS) distribution platform.
- Shop2Shop: A merchant-focused trade enablement platform offering acquiring, payments, cash management, and trade services.
Together, the combined ecosystem expands coverage across the informal market value chain, linking physical cash handling, digital card acquiring, merchant payments, and VAS distribution.
The platform will integrate into Pepkor’s broader retail-powered ecosystem, which encompasses 32 million known consumers.
Commenting on the consolidation, Peter Berry, founder and CEO of Shop2Shop, noted: “Shop2Shop was founded to bring purpose-built solutions to South Africa’s large and underserved informal merchant market, to empower small business owners.
“We’ve built a broad product set on a platform engineered for high-volume, low-cost transactions. With Flash, we are able to deepen our offering and scale, and position a proven fintech platform in South Africa,” added Berry.
Financial track record and growth dynamics
The merger combines two businesses demonstrating strong historical revenue and earnings growth trajectories. Consolidated audited figures for Flash and pro-forma management metrics for Shop2Shop highlight their standalone scale.
The financial scale of both entities is underscored by their audited and management performance metrics leading up to the transaction.
For the 12 months ended September 2025, Flash generated revenue of R11.152 billion, reflecting a three-year compound annual growth rate (CAGR) of 9%, alongside Ebitda of R900 million (a 28% three-year CAGR), profit after tax of R488 million, and a net asset value of R657 million.
Meanwhile, Shop2Shop recorded revenue of R9.327 billion for the 12 months ended June 2025, achieving a three-year CAGR of 28%, with Ebitda surging at an 85% three-year CAGR to R661 million, supported by profit after tax of R385 million and a net asset value of R521 million.
Governance frameworks and ownership structure
Post-implementation, Pepkor will hold a 57.1% majority stake in FintechCo, while the remaining 42.9% minority interest will be held by Shop2Shop (S2S), including management entities and employee structures.
Following completion, entities related to Peter Berry will hold an indirect minority stake of 24.0%.
Pepkor CEO Pieter Erasmus holds an indirect minority interest of 13.2% in FintechCo via a pre-existing minority stake in Shop2Shop that predates his executive appointment at Pepkor.
Because Erasmus’s indirect holding in Shop2Shop is below the 35% associate threshold defined by JSE rules, the deal is not classified as a related-party transaction.
Pepkor confirmed that strict governance protocols were maintained throughout negotiations, including Erasmus’s total recusal from all board deliberations regarding the transaction.
The independent members of Pepkor’s board concluded that the transaction terms are fair and reasonable, supported by independent valuations and a voluntary fair-and-reasonable opinion.
S2S shareholders have agreed to maintain a minimum 15% stake in FintechCo for at least five years from the effective date.
To regulate liquidity prior to any medium-term public listing, the shareholders’ agreement includes reciprocal put and call option arrangements exercisable between five and eight years post-completion.
This article was republished from Moneyweb. Read the original here.
