Velora Capital is both the highest-margin element of the plan and the element that most changes the Company’s capital structure and risk profile. It warrants a dedicated section because its funding, credit and governance requirements are materially different from the payments business.
Product and mechanics
Velora Capital provides revenue-based working-capital advances to active merchants. Underwriting draws on the merchant’s live transaction history through VeloraPay; approved advances are disbursed within about one business day; and repayment is collected automatically as a fixed percentage of daily card settlement. Because repayment flexes with takings, the product self-adjusts to the merchant’s cash-flow cycle — repayments slow when business slows — which both serves the merchant and reduces default. This is the same mechanic that comparable operators have used to deploy over R3 billion to more than 25,000 businesses.
Book growth and yield
The analyst has sized the lending book from the lending-revenue mix, assuming a blended gross yield of roughly 34% on the average book (reflecting short-tenor, higher-risk revenue-based finance). On this basis the gross book grows from about R16 million in FY2027 to approximately R1.3 billion by FY2031.
The funding structure — a separate warehouse
A lending book of this size cannot and should not be funded from growth equity. The plan therefore assumes a ring-fenced securitisation-style warehouse facility, into which eligible advances are sold, funded at an assumed 80% advance rate. VeloraPay retains the 20% first-loss equity layer — this is the economic purpose of the R100 million “lending capital pool” in the raise. The warehouse itself is a separate facility, arranged with a senior warehouse lender (a DFI or bank), and is not part of the R450 million headline. Recent market precedent — including a R340 million development-finance facility raised by a comparable SME lender in early 2026 — confirms both the availability and the appropriate source of such funding.
Key findingTwo linked capital findings on the lending book
1. Separate warehouse required. The ~R1.04 billion warehouse needed by FY2031 sits outside the R450 million raise. A committed facility is a condition precedent to scaling Velora Capital; absent it, the lending trajectory is unfundable and the plan’s revenue mix does not hold.
2. First-loss layer outgrows the pool. The 20% first-loss equity layer reaches roughly R260 million by FY2031, exceeding the R100 million lending pool from about FY2030. The shortfall (~R160 million) must be funded from retained earnings or a follow-on — a real, quantified future capital need, not a rounding item.
Credit risk and its management
Lending to SMEs — and especially to informal merchants — carries meaningful credit risk. The analyst models cost of risk peaking at approximately 6.5% of the average book in FY2028 as the book seasons and the informal mix rises, with gross non-performing loans peaking near 5.8%, before both improve as underwriting data deepens and the book matures. An expected-credit-loss provision of about 7% of the gross book is held on balance sheet throughout.
- Data-driven underwriting on live transaction flow, with continuous re-rating as behaviour evolves.
- Repayment via settlement collected as a share of daily takings, structurally reducing default relative to fixed debit orders.
- Portfolio limits and provisioning with concentration caps by segment and geography and a ~7% ECL provision stock.
- Independent risk governance under a dedicated Chief Risk Officer, with the lending entity ring-fenced from the payments business.
Analyst flagUnproven at scale on the informal book
The cost-of-risk assumptions are reasonable against comparable secured-by-settlement lenders, but VeloraPay’s specific informal-merchant strategy pushes into a cohort with limited conventional credit history. If realised losses run materially above the modelled ~6% cost of risk, the lending contribution — and the margin expansion it drives — erodes quickly. A staged roll-out with tight early limits and close loss monitoring is the appropriate mitigant, and is assumed in the roadmap.