Business

Peter Berry, Shop2Shop

Ever since apparel retailer Pepkor hinted at the separate listing of its Flash fintech unit at the group’s capital markets day in March, it was almost certain that it would look to bulk this up before heading to the JSE. Not that its existing business is sub-scale. Today, the Flash platform has over 176 000 traders, with 80 000 acquiring devices processing over 5.5mn transactions. Annual throughput on the platform is R66bn. In its most recent financial year, Flash generated R11.2bn in revenue, growing at an average of 9% over the last three quarters, with profits on an EBITDA basis of R900mn (growing at an average of 28%).

But Pepkor will report revenue of over R100bn this year and it has a market value of around R80bn. Any deal to bulk up Flash would, therefore, need to be big enough to move the needle. Ideally, any target should be operating in the informal market, like Flash. That’s a far easier story to take to the market, and to operate, than a disparate bunch of fintech businesses stitched together.