Pepkor rethinks Investec tie-up as it eyes solo bank startup

Pepkor Holdings is weighing plans to abandon a possible partnership with Investec Bank and instead launch a lender on its own, according to a person familiar with the matter.

The retailer, Africa’s largest seller of clothing and mobile phones, had considered teaming up with Investec to expand into financial services. It’s now mulling a plan to roll out the venture independently, the person said, asking not to be identified because the process is ongoing. A final decision hasn’t been made, and Pepkor is expected to update the market at an investor presentation in Cape Town as early as this month, the person said.

Read: Pepkor seeks money chief as top Africa clothes seller plans bank

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Pepkor declined to comment, while Investec said it was unable to discuss any talks that “may or may not have taken place.”

Cape Town-based Pepkor has already begun laying the groundwork. In a job posting dated March 11, it advertised for a banking chief to lead a “fully integrated transactional-banking model” across more than 2 500 PEP stores in South Africa. The executive will spearhead what the company described as a large-scale strategic initiative requiring an entrepreneurial approach and deep retail-banking expertise.

Read: Pepkor CEO sells half a billion rand of shares

Pepkor received regulatory approval last year to establish a banking unit and has acquired a financial-technology platform to support the expansion. In December, it appointed former Investec Bank Chief Executive Officer Richard Wainwright as an independent non-executive director. Pepkor’s fintech revenue rose 31% to R16.6 billion ($992 million) in the year through September, accounting for 17% of total sales.

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Read: Pepkor posts solid first-quarter growth, led by fintech and credit

The move positions Pepkor alongside retailers such as Shoprite Holdings, which are leveraging loyalty-program data to expand into banking. About a sixth of South Africans remain unbanked or underserved.

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