CAPITEC BANK HOLDINGS LIMITED - Voluntary Announcement: Acquisition of a Controlling Interest in an International Online Lending Group

Voluntary Announcement: Acquisition of a Controlling Interest in an International Online Lending Group

Capitec Bank Holdings Limited
Registration number 1999/025903/06
Incorporated in the Republic of South Africa
Registered bank controlling company
Share Code: CPI ISIN: ZAE000035861
("Capitec" or the "Company")

VOLUNTARY ANNOUNCEMENT: ACQUISITION OF A CONTROLLING INTEREST IN AN
INTERNATIONAL ONLINE LENDING GROUP

The Prudential Authority of the SA Reserve Bank has approved a
transaction for Capitec to increase its shareholding in Avafin
Holding Limited ("Avafin"), an international online consumer lending
group, from 40.66% to 97.69% at a purchase price of €26.3 million.

Shareholders are referred to the announcement on the JSE Stock
Exchange News Service dated 24 March 2017 regarding Capitec's
acquisition of an initial 40% interest in Cream Finance Holding
Limited (renamed Avafin), domiciled in Cyprus. The acquisition of a
minority interest in Avafin in 2017 provided Capitec with the
opportunity to gain experience in the international online consumer
credit market, management of operations and risk in foreign markets
and international diversification of Capitec's income sources.

Avafin management will continue to hold the residual interest in the
business, in line with Capitec's philosophy of management ownership.

The transaction is subject to the approval of the Financial
Surveillance Department of the SA Reserve Bank and the Polish
competition authority.

Key reasons for acquiring the controlling interest in Avafin:

•   Strong culture fit – Avafin is a small challenger, taking on
    large market leaders by focusing on niche solutions for clients
    through the efficient use of a sophisticated, scalable,
    technology driven online consumer credit platform and sound
    credit risk management principles.
•   Geographical diversification - The business model developed from
    a high dependency on a single market to successful operations in
    multiple markets. Avafin provides online consumer loan products
    in Poland, Czechia, Latvia, Spain and Mexico.
•   Excellent management team – Management and staff are innovative
    with a pragmatic approach and responsive to changes in the
    diverse geographical environments in which they operate:
    - The business has developed successfully despite multiple
       challenges including Covid-19, the Ukrainian crisis and
       regulatory changes in a number of countries where Avafin
       operates.
    - Avafin is agile and management has a proven track record for
       timely identification and swift implementation of necessary
       changes to its systems, processes and credit risk appetite.
  -   The efficiency in adapting and managing change has led to
      improvements in Avafin's competitive position and market share
      after overcoming each of the above challenges.

Avafin is closely aligned to Capitec's client centric retail
business model and well positioned for growth.

More information on Avafin is available at https://avafin.com/wp-
content/uploads/2023/08/AvaFin_Investor_Factsheet.pdf

12 March 2024
Stellenbosch

Sponsor
PSG Capital

Date: 12-03-2024 09:30:00
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