Pepkor Creates Fintech Powerhouse with R21 Billion Deal

South African retailer Pepkor is making a significant move in the financial services sector by merging its fintech subsidiary Flash with merchant platform Shop2Shop. The combined entity, named FintechCo, will have a valuation of R21.3 billion ($1.3 billion) and process over R200 billion ($12 billion) in annual transaction value.

The merger aims to create a comprehensive financial services provider for South Africa’s informal retail sector – the spaza shops and independent traders that form the backbone of many communities.

What’s Changing?

• Flash already serves as one of South Africa’s largest value-added service (VAS) networks, enabling merchants to sell airtime, data bundles, prepaid electricity, and other digital products
• Shop2Shop helps these same merchants accept digital payments, manage cash flow, order inventory, and access business tools
• Both platforms combined create a single point of access for financial services in the informal economy

Pepkor will inject R1.57 billion ($95 million) into the deal and retain a 57.1% controlling stake.

Strategic Implications

This acquisition aligns with Pepkor’s broader strategy to diversify beyond its retail roots and become a major player in financial services. The company’s “Financial Services” business grew by 41.6% year-on-year, generating R3.0 billion ($182 million) in revenue during the first half of its 2026 financial year.

By integrating fintech solutions into its existing retail network – which includes brands like PEP and Ackermans – Pepkor aims to capture a larger share of consumer spending and build stronger relationships with both merchants and customers.

The company has already sold over 11.5 million handsets, creating additional touchpoints for cross-selling financial products.

Future Outlook

Pepkor plans to eventually list FintechCo separately on the Johannesburg Stock Exchange (JSE), potentially creating a new publicly traded payments company focused on serving South Africa’s informal economy.