(Adds detail, CEO comment)
JOHANNESBURG, March 24 (Reuters) - South Africa's Capitec Bank has purchased a 40 percent stake in Latvia's Creamfinance for 21 million euros ($22.7 million), the lender said on Friday, its first acquisition outside its home market.
Capitec has grown from a startup to a bank of nearly 8 million clients within 15 years in a banking sector long dominated by Barclays Africa Group, Standard Bank , Nedbank and FirstRand's First National Bank.
"It was only a matter of allowing the bank to mature to a point where it was ready to take its first international step," Capitec Chief Executive Gerrie Fourie said in a statement.
Creamfinance has operations in Latvia, Poland, Czech Republic, Georgia, Denmark and Mexico and uses technology and smart data credit scoring methods to lend online, the firm said.
Capitec, which benefited from South Africa's rapid growth of loans not backed by assets, will use the investment to gain experience in advancing credit in the international and online environment, Fourie said.
"Creamfinance's online business model has been developed in such a way that new countries can be entered swiftly and efficiently, requiring limited investment in local infrastructure," he added.
The acquisition will be done in three tranches at 9-month intervals, whereafter Creamfinance's existing shareholders will have the option to sell Capitec a further 9 percent stake.
"It is not the intention for Capitec to become a controlling shareholder," the bank said.
Capitec has been lessening its dependence on lending by growing its revenue from transactional banking in recent years.
Shares in Capitec were down 0.5 percent at 803.40 rand, having gained 16 percent so far this year and more than trebling since the start of 2014.
$1 = 0.9264 euros Reporting by TJ Strydom; Editing by Joe Brock and Mark Potter