TymeBank, which is set to reach the 6-million-customer mark in December, has finalised the acquisition of SME funder Retail Capital, which will become the rapidly growing digital lender’s new business banking offering.
The Patrice Motsepe-backed bank said in a statement on Tuesday that it had received all the necessary regulatory approvals to conclude its acquisition of 100% of Retail Capital, a fintech company that provides funding to small and medium-sized enterprises (SMEs). The R1.5bn deal will result in Retail Capital CEO Karl Westvig joining the Tyme Group’s executive committee while also being responsible for TymeBank’s business banking and lending offerings.
“This is our first acquisition and the beginning of a new era for TymeBank as we branch out into working capital funding for small businesses,” TymeBank CEO Coen Jonker said. “TymeBank Business Banking is strengthened by a quality acquisition and a high-calibre team and we look forward to making business banking and access to capital more affordable for SA’s small-business owners and entrepreneurs.”
TymeBank said it has no immediate plans to rebrand Retail Capital, which will continue to operate as usual though it is set to become a fully fledged division of its new parent before the end of December 2022. The lender’s new business banking division already has more than 120,000 customers with a transactional business account that can be opened in less than five minutes.
“We want to maintain commercial momentum so we will focus on making the integration as seamless as possible, while meeting all the regulatory and reporting requirements of a single business,” said Jonker.
Over the past decade Retail Capital has provided more than 50,000 business owners in SA with more than R7bn in working capital, making it the largest SME funder of its kind in the sector. Its lending model, called merchant cash advances, provides SMEs with funding against turnover and cash flow rather than against assets.
Instead of charging a specific interest rate over a particular term, Retail Capital’s model is to agree on an advance repayment amount upfront. Merchants then make payments based on a percentage of revenue earned by their business over time. TymeBank’s long-term goal is to expand its SME banking offering to the Philippines and Pakistan, where former CEO Tauriq Keraan is leading its offshore expansion.
“The power of Tyme’s technology, distribution and deposits and Retail Capital’s funding capabilities makes this a very natural partnership,” said Westvig. “Small businesses in particular require support to grow and employ more people, leading to a more prosperous future for us all.”
TymeBank business customers benefit from zero monthly bank fees, free debit card and online purchase transactions, free bulk payments and other benefits. Business customers also have access to TymePOS, a mobile point-of-sale app that turns an NFC-enabled cellphone into a tap-and-go payment device.
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