Online credit marketplace RainFin has agreed to sell its corporate debt marketplace to 4 Africa Exchange (4AX) in exchange for a strategic shareholding in 4AX.
RainFin provides a secure online platform within which users can invest and borrow money at more competitive interest rates, cutting out SA's traditional banking sector.
4AX says it aims to make financial markets more inclusive by providing a safe and licensed platform that delivers easier access and more product variety to issuers and brokers - while still affording both institutional and retail investors the protection, disclosure and transparency required within a formal exchange environment.
The addition of the RainFin credit marketplace technology and value proposition to the 4AX listed equities and debt platform allows 4AX to further expand its market disrupting debt offerings, says 4AX.
The collective value proposition is set to deepen South Africa's debt capital market and expand on the growing sophistication of Africa's debt and loan markets, it notes.
RainFin's technology enhances efficiencies in the primary debt-listing market (arranging and book-building), while 4AX's technology and regulation framework enhances efficiencies to secondary-market liquidity, adds 4AX.
"It is a long-standing fact that the debt market is inadequately serviced, a problem that it is not isolated to South Africa, says Fay Mukaddam, 4AX CEO.
"The conclusion of this transaction will allow 4AX to build on the concept of crowdfunding, and a credit marketplace platform pioneered by RainFin, and significantly enhance that by bringing the offerings into a regulated world through alignment of the debt instruments issued by the RainFin platform and our listed regulated exchange."
Technology as enabler underpins this transaction, given that technology is increasingly being utilised to facilitate operational and regulatory change within capital markets, says 4AX.
The complementary nature of 4AX and RainFin's respective business value propositions will result in technology-led debt products and services to meet the needs of the local market, it adds.
According to Sean Emery, RainFin CEO, there is growing market demand for companies to have the tools to raise debt directly from the market.
"In essence this would include, technology-led self-origination, cost-effective arranging, book-building and private placement, and supply expansion i.e. increased supply of highly rated debt listings. The collective RainFin and 4AX offering is timely, in that there is a distinctive product-market fit."
4AX says it will launch the debt listing offering in Q3 of 2018. The company says it aims to operate as a truly South African empowered exchange.
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