Capitec dumping its black sheep once and for all

Capitec is selling its Rental Finance business to Sasfin Capital, with CEO Graham Lee describing this unit as the “odd one out” in the bank’s staple.

Lee explained that the Capitec Rental Finance (CRF) business, unlike its other units, required disproportionate effort with little return.

In fact, Capitec only had the business because it was “part of the package” when it acquired Mercantile Bank in 2019.

Now that CRF is being sold to Sasfin, Capitec can turn its focus to business segments it can scale more effectively.

Lee shared these comments during a media roundtable following the release of Capitec’s results for the first half of the 2027 financial year.

In these results, Capitec explained that it decided to dispose of CRF because the rental business no longer aligns with its core strategic focus, and according to Lee, it never truly did.

When Capitec acquired Mercantile Bank in 2019, laying the foundations for what would become its own business banking offering, it came with a host of smaller businesses.

The R3.56 billion acquisition included Mercantile Bank, a portion of property, Mercantile Payment Solutions, Compass Securitisation, and Mercantile Rental Finance.

Since the deal was concluded, these businesses have been absorbed into or rebranded within Capitec’s portfolio, including CRF.

CRF was put under the Business Banking umbrella, providing asset-backed leasing and rental finance solutions designed for commercial clients.

It allowed business clients, including small businesses and entrepreneurs, to lease essential capital equipment without large upfront outlays.

In doing so, it helped businesses preserve their working capital and existing credit lines while giving them access to the latest technology.

On paper, this business makes sense for Capitec, which has always prided itself on servicing small businesses in particular.

CRF also performed well under Capitec’s stewardship, with its new rental agreements rising from R197.1 million in 2020 to R835.8 million in 2026.

The CRF business was making a selling profit of R5.92 million in Capitec’s 2026 financial year, more than double what it made when CRF was first acquired.

However, according to Lee, achieving this growth took a disproportionate amount of effort.

Selling to Sasfin

At the media roundtable, Lee did not elaborate on what this disproportionate effort entailed, but the bank’s 2026 annual report provides some indication.

Capitec outlined its strategic priorities for CRF, which included:

• Building supplier and vendor partnerships to drive distribution and originations
• Enhancing automated credit assessment efficiency for faster approval turnarounds
• Optimising collection and asset recovery models to manage credit risk

In the first half of Capitec’s 2027 financial year, CRF’s loan book reached R1.9 billion, representing 1.4% of the bank’s total gross lending exposure.

At a time when Capitec is working to significantly expand its Business Banking unit, it makes sense that the bank would not want to put a disproportionate amount of effort into CRF.

In announcing the disposal, Capitec said in its interim results, “CRF’s rental business does not align with Capitec’s core strategic focus.” Lee expressed a similar sentiment. 

“We’re looking at all of the businesses that really speak to the core of what we want to do as well as leverage our strengths,” he said.

“And Capitec Rental Finance is now, and kind of always has been, the odd one out.”

He explained that, when Capitec acquired Mercantile Bank, CRF “just came as part of the package”.

“We did obviously try to do something with it, but for the size of the prize, number of clients, etc., the effort that it took was just disproportionate,” Lee explained.

“We want to be focused more on the things we can do really well and really scale. We’re disposing of it, and it’s the only entity like that that we have.”

Capitec said it believes CRF will benefit from integration with a specialist operator, which is why Sasfin will now be acquiring the business.

Once the acquisition is completed, CRF will merge directly into Sasfin’s Sunlyn business, which is its specialised non-bank alternative lending and rental finance business.

As part of the deal, Capitec is providing CRF with a secured credit facility of R1.6 billion to fund its ongoing rental receivables book.