Pep seals R21.3 billion deal to take on South Africa’s hidden R1 trillion economy

Pepkor has announced the merger of its Flash business with Shop2Shop as part of the retailer’s plan to build South Africa’s pre-eminent fintech platform.

This transaction, valued at R21.3 billion, will allow Pepkor to serve both the formal and informal economy. The merged business may be listed on the JSE in the years to come.

On Wednesday, 22 July, Pepkor announced plans to combine its Flash business with Shop2Shop.

Flash is Pepkor’s value-added services distribution network and digital products fintech platform, specifically aimed at the country’s informal market. 

Flash offers digitised cash and financial solutions to informal traders, tapping into South Africa’s high-potential yet largely hidden informal economy that has an estimated value of R1 trillion.

In Pepkor’s latest annual results, it revealed that Flash’s network supports 176,000 traders, with a total throughput of R34.7 billion.

Shop2Shop is a merchant-focused trade enablement fintech platform that offers merchants acquiring, payments, cash management, and trade services.

The proposed merger of these two companies will build on the long-standing commercial relationship between Flash and Shop2Shop.

Pepkor said this transaction will expand its reach across the informal market value chain. Through the transaction, Pepkor will acquire a 57.1% controlling interest in FintechCo. 

This will be done through a cash purchase subscription of R1.57 billion for new shares in Shop2Shop, and the contribution of 100% of its shares in Flash, valued at R10.6 billion.

The total equity valuation of FintechCo implied by this proposed transaction is R21.3 billion.

“The proposed transaction is a significant step in Pepkor’s strategy to accelerate expansion within its Informal Market Platform segment and will unlock value for shareholders through a planned future listing,” Pepkor said.

The retailer explained that South Africa’s informal market represents a fast-growing segment of the economy, underpinned by resilient consumer demand and increasing merchant participation.

Pepkor’s operating profit from its standalone Informal Market Platform reached R562 million in the first half of 2026, up 23.5% from the prior half-year.

“The proposed transaction combines two complementary businesses to create a significant merchant commerce and fintech platform in South Africa,” it said. 

The retailer said this merged business will be well-positioned to support merchants transitioning to digitally enabled businesses while maintaining accessibility for cash-based transactions.

“Shop2Shop was founded to bring purpose-built solutions to South Africa’s large and underserved informal merchant market, to empower small business owners,” Shop2Shop CEO Peter Berry said. 

“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.”

Pepkor chief commercial officer Garth Napier said the transaction presents a logical next step in expanding the group’s participation across the informal market value chain.