From left: Willem Roos (co-founder OUTsurance); Laurie Dippenaar (co-founder FirstRand); Dov Girnun (CEO and co-founder Merchant Capital); GT Ferreira (co-founder FirstRand); Ryan Cohen (co-founder Merchant Capital); Paul Harris (co-founder FirstRand); Daniel Maritz (co-founder Merchant Capital); Barry Schwartzberg (co-founder Discovery)

Johannesburg - RMI Holdings - a listed financial services investment company - has bought a 25.1 percent stake in Merchant Capital for an undisclosed amount.

Merchant Capital, formed in 2012 in response to the high failure rate among small businesses caused by lack of funding, joins RMI’s other holdings such as MMI Holdings - born out of the merger of Momentum and Metropolitan, Discovery, OUTsurance and RMB Structured Insurance.

RMI was unbundled from RMB Holdings in 2011.

In the year to June 2014, the last full-year for which results are currently available, all of the businesses in which RMI is invested grew, driving the company’s bottom line income. It reported “strong growth” from Discovery and OUTsurance, driven largely by the performance of their offshore operations.

In addition, Discovery’s market capitalisation gained 16 percent during the year, while MMI’s value grew 18 percent. Over the year RMI’s market capitalisation increased by 30 percent to R48.7 billion.

Merchant Capital CEO and founder Dov Girnun says the investment will offer “Merchant Capital a huge amount of knowledge and expertise in the building and scaling of innovative entrepreneurial businesses such as Discovery and OUTsurance”.

Girnun recently made it onto the Endeavor Global Network, becoming one of 34 entrepreneurs invited to join the network this year.

He notes the deal has given Merchant Capital a significant boost through a stronger board as RMI CEO, Herman Bosman, has been appointed to its board.

It will also provide strategic input and access to capital.

“We are thrilled to embark on this exciting process with RMI, in collaboration with AlphaCode, RMI’s just-launched next generation fintech platform. The collaboration also supports our longer-term strategic goals, including our expansion strategy that is underway. The skills and experience that we now have access to are invaluable and will support our growth strategy.”

Dominique Collett, senior investment executive at RMI, says the deal is an “exciting opportunity” for RMI.

IOL