Fintech group Lesaka Technologies will acquire 100% of the issued ordinary shares of Bank Zero, subject to regulatory approvals.
Formerly known as Net1 UEPS Technologies, Lesaka is listed on the Johannesburg Stock Exchange and the Nasdaq.
Based on a zero-fee banking model, Bank Zero launched to the public in August 2021. It is co-founded by seven investors, including former First National Bank CEO Michael Jordaan and banking innovator Yatin Narsai.
In a statement issued this morning, Lesaka says the acquisition will be settled through a combination of newly-issued shares − such that the shareholders of Bank Zero will own approximately 12% of Lesaka’s fully-diluted shares at the time of completion of the proposed transaction − and up to R91 million ($5.1 million) in cash.
All amounts are translated at the closing rate of R17.75 as of 25 June.
According to the fintech group, the transaction marks a milestone in its objective to build a vertically-integrated fintech platform.
“The combination of Bank Zero’s digital banking infrastructure and its operational banking licence, together with Lesaka’s fintech and distribution platform, is intended to transform the way Lesaka is able to conduct business in the future.”
Lesaka expects the transaction to support a more optimised balance sheet in the future, allowing it to finance the existing and continued growth in lending books through customer deposits, driving stronger lending unit economics.
In addition, the reduction in the use of bank debt in the group’s consumer and merchant divisions will assist in a deleveraging of Lesaka’s gross debt. Post-completion, and subject to regulatory approval, Lesaka could achieve more than R1 billion reduction in gross debt, it notes.
The proposed transaction was agreed based on an assumed Lesaka share price of R88.26 ($4.97) and the current fully-diluted share count.
The transaction consideration of an approximate 12% stake in Lesaka − approximately R1 billion ($56.3 million), together with up to R91 million ($5.1 million) in cash − implies a transaction consideration of up to R1.1 billion for the acquisition of Bank Zero, according to the statement.
Lesaka chairman Ali Mazanderani says: “The acquisition of Bank Zero is a transformative event in Lesaka’s journey, enabling us to better serve our consumers, merchants and enterprise clients by embedding a trusted, well-engineered neobank capability into our fintech platform. I am delighted to welcome the Bank Zero team to Lesaka as partners.”
Bank Zero had a deposit base in excess of R400 million, and more than 40 000 funded accounts across SA, as at the end of April.
Upon completion of the proposed transaction, the selling shareholders of Bank Zero – which include Jordaan, Narsai and other key members – will collectively hold a 12% stake in Lesaka.
Further, Jordaan will join the Lesaka board of directors, while Narsai will continue as CEO of Bank Zero. The broader Bank Zero leadership team will also remain in their current roles.
Bank Zero sellers will be subject to regulatory and contractual lockups, ranging from 18 to 36 months post-completion, depending on the seller.
Bank Zero chairman Jordaan states: “This transaction reflects a strategic partnership underpinned by long-term alignment, which will result in the continued involvement of all Bank Zero founders and management.
“Our belief in the combined platform’s future is clear and we see strong symmetry in our vision. There is a strong international precedent for fintechs that have acquired banking capabilities to deliver more integrated, compliant and capital-efficient financial services.
“We are confident that the synergies between our digital banking infrastructure and Lesaka’s fintech reach will create sustainable value for all stakeholders.”
Narsai concludes: “Bank Zero was built from the ground up to deliver a secure, digital-first banking experience that puts control back in the hands of customers. Our focus has always been on using technology to remove friction, lower costs and challenge legacy banking norms.
“Joining forces with Lesaka allows us to accelerate that mission at scale – reaching more customers, faster – while staying true to the principles that define who we are. It represents a critical step for Lesaka and Bank Zero in realising new revenue streams, improving capital efficiency and unlocking synergies across our ecosystem.”
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