Pepkor is doubling down on South Africa's fast-growing informal economy, announcing a landmark transaction that will combine its fintech subsidiary Flash with payments platform Shop2Shop to create one of the country's largest merchant commerce and fintech businesses.
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The proposed transaction will see Pepkor acquire a controlling 57.1% stake in the newly combined fintech platform (FintechCo), creating a business with an annual transaction throughput exceeding R200bn and an implied equity valuation of approximately R21.3bn.
The deal represents one of the most significant fintech transactions in South Africa's retail sector, strengthening Pepkor's ambitions to build an integrated digital financial services ecosystem while deepening its presence in the country's informal economy.
Building a fintech powerhouse
The combination brings together two complementary businesses serving South Africa's informal retail sector.
Shop2Shop has built an extensive merchant and payment network, providing upstream payment infrastructure and cash-handling capabilities, while Flash has established itself as a front-runner in value-added services (VAS), digital products and payment solutions.
Together, the businesses will create an integrated platform spanning cash handling, acquiring, payments, digital services and financial products, providing informal traders with a broader suite of technology-driven solutions.
The transaction also reflects Pepkor's strategy of diversifying earnings beyond traditional retail by expanding into high-growth financial services and digital commerce.
Tapping into the informal economy
South Africa's informal economy continues to grow as millions of consumers and entrepreneurs increasingly rely on neighbourhood retailers, township businesses and independent merchants.
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Pepkor believes the combined platform is well positioned to capitalise on this opportunity by offering merchants integrated payment solutions, financial services and digital products through a single ecosystem.
Peter Berry, founder and CEO of Shop2Shop, said the merger would significantly strengthen the platform's ability to serve small businesses.
Annele Dippenaar 14 May 2026 "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."
Strengthening Pepkor's digital ambitions
For Pepkor, the acquisition represents more than a fintech investment.
The retailer views the transaction as a critical building block in expanding its financial services ecosystem and advancing its long-term ambition of developing a leading digital banking platform supported by one of the country's largest retail distribution networks.
Garth Napier, chief commercial officer at Pepkor, described the transaction as transformational for the group.
"This transaction is transformative for Pepkor and was the logical next step in expanding the Group's participation across the informal market value chain while extending the reach of our financial services ecosystem and supporting our ambition to build a leading digital bank with a nationwide distribution footprint."
Transaction structure
Pepkor will secure its controlling stake in FintechCo through a combination of:
- A R1.57bn cash subscription for newly issued Shop2Shop shares.
- The transfer of 100% of Flash, valued at R10.6bn, into the combined business.
Following completion, Pepkor will own approximately 57.1% of FintechCo.
The company also indicated that the transaction creates the potential for future shareholder value through the planned listing of FintechCo.
Lulah Dube and Nqobile Dludla 2 Jun 2026 Subject to regulatory approval
The transaction remains subject to several conditions precedent, including approvals from South Africa's competition authorities and other relevant regulators.
If approved, the merger will establish one of the country's largest merchant commerce platforms, positioning Pepkor at the centre of South Africa's rapidly evolving fintech, payments and informal retail ecosystem.
With digital payments accelerating and financial inclusion becoming increasingly important across township and informal markets, the deal signals Pepkor's intention to play a leading role in shaping the future of merchant commerce in South Africa.
