Home » Industry News » Pepkor to terminate Wands relationship

Pepkor to terminate Wands relationship

Pepkor Holdings announced on Friday that it had agreed to terminate its existing commercial relationship with subsidiaries of Wands Investments (Wands) that were entered in 2016.

Wands is responsible for the funding of credit books that provide financial services to customers of certain Pepkor retail brands and for delivering financial services by providing credit through Century Capital (Cencap) to customers of the JD Group (JD consumer credit) and unsecured personal loans (Capfin loans) provided by using the Pep and Ackermans retail footprint.

However, Wands carries the credit risk related to these financial services.

Wands, a subsidiary of Fulcrum Financial services SA (Fulcrum), also provides insurance through FGI Holdings (FGI) under the brands of Abacus Insurance and Abacus Life.

On Friday Pepkor said it had considered its options and decided not to pursue the acquisition of the credit books owned by Cencap, but instead would build its own credit books. “The ability of Cencap to continue funding financial services provided to Pepkor customers is uncertain. This presents a business risk to Pepkor as financial services enables sales in especially the JD Group retail businesses,” Pepkor said.

The group said it already possessed the financial services administration capabilities to manage the inherent credit risk associated with the internal funding of retail credit and unsecured lending books. “The group’s capability is further strengthened by successfully funding and managing the clothing and general merchandise retail credit book through Tenacity Financial Services since 2007,” Pepkor said.

Pepkor said it sought to mitigate any risk to its business operations and aimed to take control of the funding of financial services provided to Pepkor customers. In addition, it was also seeking to maintain profitability insofar as it related to financial services and Pepkor’s financial services operations and, ultimately, it sought to end its commercial relationship with Fulcrum, Wands and Cencap in a responsible manner.

However, the group said it further sought to protect the positive contribution from insurance products provided to Pepkor customers by FGI, through its subsidiaries Abacus Life and Abacus Insurance. Pepkor added that with regard to the existing credit books, commercial agreements were renegotiated, granting Pepkor the right to continue collection of the Cencap-owned loan books for the run-down period of the books, up to a maximum period of three years.

Steinhoff International is the majority shareholder in Pepkor with a 71.01 percent stake.

This article was sourced from IOL/BusinessReport; for the original article, click here

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