Pepkor has entered into agreements to combine its Flash business with Shop2Shop and acquire a 57.1% controlling interest in the resulting South African merchant commerce and financial technology platform.
The combined business, referred to as FintechCo, has an implied equity valuation of approximately R21.3 billion. Pepkor will obtain its controlling stake by investing R1.57 billion in cash into Shop2Shop and contributing all of its shares in Flash, which has been valued at R10.6 billion.
Shop2Shop’s existing shareholders will own the remaining 42.9% of FintechCo. Pepkor ultimately plans to pursue a separate public listing of the combined business in the medium term as a way of unlocking shareholder value.
Flash operates a value-added services distribution network and digital products platform. Shop2Shop provides merchants with payment acceptance, acquiring, cash management and trade services.
The combined platform will serve both the formal and informal South African economies and is expected to process more than R200 billion in annual transaction value. Pepkor believes the transaction will create one of the country’s largest merchant-focused commerce and fintech platforms.
The businesses already have an established commercial relationship. Combining them is intended to connect Flash’s digital products and distribution capabilities with Shop2Shop’s merchant payments and trade infrastructure.
FintechCo will support cash handling, payment acceptance, value-added services and other financial products across the informal market value chain. The business will also connect with Pepkor’s retail-powered consumer platform, which spans approximately 32 million known customers.
Pepkor’s R1.57 billion cash subscription will be used to repay Shop2Shop debt and settle other relevant obligations. Shop2Shop will simultaneously issue additional shares to Pepkor in exchange for the contribution of Flash.
Flash generated R11.15 billion in revenue and R900 million in EBITDA during the 12 months ended September 2025. Shop2Shop reported R9.33 billion in revenue and R661 million in EBITDA for the 12 months ended June 2025.
Flash reported a three-year revenue compound annual growth rate of 9% and EBITDA growth of 28%. Shop2Shop reported three-year compound annual growth rates of 28% for revenue and 85% for EBITDA.
The Shop2Shop shareholders have agreed to retain a minimum 15% interest in FintechCo for at least five years after the transaction becomes effective. The shareholder agreement also contains put and call arrangements that could provide liquidity if the planned listing has not occurred.
Those options generally become exercisable between five and eight years after completion, subject to agreed conditions. All put and call options would terminate if FintechCo completes its planned listing.
Pepkor CEO Pieter Erasmus holds an indirect minority interest in Shop2Shop through an associated company. Pepkor said the interest predates his appointment and falls below the threshold that would cause the deal to be classified as a related-party transaction.
Erasmus recused himself from all discussions and decisions involving the transaction. Independent valuations were obtained for Flash and Shop2Shop, and Pepkor’s independent directors determined that the proposed combination was fair, reasonable and in shareholders’ best interests.
The transaction is subject to regulatory and competition authority approvals. It is classified as a Category 2 transaction under Johannesburg Stock Exchange requirements and does not require Pepkor shareholder approval.
Investec Bank and Rothschild & Co South Africa are serving as financial advisers to Pepkor, while ENS is providing legal counsel. Rand Merchant Bank is advising Shop2Shop and its shareholders, with Webber Wentzel serving as their legal adviser.
KEY QUOTE:
“Shop2Shop was founded to bring purpose-built solutions to South Africa’s large and underserved informal merchant market, to empower small business owners.”
“We’ve built a broad product set on a platform engineered for high-volume, low-cost transactions. With Flash, we are able to deepen our offering and scale, and position a proven fintech platform in South Africa.”
Peter Berry, Founder and CEO of Shop2Shop
