Nedbank Group will acquire fintech innovator iKhokha in a R1.65 billion all-cash deal. The big-five bank says in a statement that the acquisition is expected to conclude in the coming months, subject to regulatory approvals.
The strategic move aims to deepen Nedbank's support for small and medium enterprises (SMEs) through digital innovation and inclusive financial services, it notes.
iKhokha was founded in 2012 by Matt Putman, Ramsay Daly and Clive Putman, with the aim of providing card machines, digital payment solutions and business tools to SMEs.
BDO projects Africa's fintech market − led by South Africa, Nigeria, Egypt and Kenya − will grow 13-fold to $65 billion by 2030, with a compound annual growth rate of 32%.
The acquisition will see iKhokha become a wholly- owned subsidiary of Nedbank, while continuing to operate under its own brand and leadership team.
Ciko Thomas, Nedbank group managing executive for personal and private banking, comments: “This acquisition is a natural evolution of our existing relationship with iKhokha and we are incredibly excited to welcome iKhokha to our Nedbank family.
“The acquisition is a pivotal moment in our strategy to empower the SME market. By combining their innovative technology with our deep banking experience, we will provide small business clients with the best-in-class tools they need to thrive.”
Jason Quinn, chief executive of Nedbank Group, adds that the financial institution believes empowering entrepreneurs is essential to building a thriving and inclusive economy.
“iKhokha’s mission and technology align perfectly with our vision for digital transformation in the SME sector. Together, we will unlock new opportunities for growth and financial inclusion in South Africa and potentially abroad.”
According to the statement, the transaction also marks a successful exit for iKhokha’s long-standing investors − Apis Partners, Crossfin Holdings and the International Finance Corporation. Crossfin backed the iKhokha founders from the initial concept in early 2012.
Dean Sparrow, CEO of Crossfin Holdings, says: “We are extremely proud of what has been achieved by the iKhokha team to date and the fact that we have found a great home for the business, its people and the SME market it services.”
Matteo Stefanel and Udayan Goyal, managing partners at Apis Partners, comment: “We are incredibly proud of how far iKhokha has come, from a promising fintech start-up, to one of South Africa’s leading payment providers.
“Our partnership with Matt and the team has been deeply rewarding, not only in terms of the company’s rapid growth but also its powerful impact on thousands of South African SMEs. As iKhokha enters its next phase under the ownership of Nedbank, we’re confident it will continue to scale its mission of driving financial inclusion and empowering entrepreneurs across the country.”
“This is a proud moment for both the founders and the broader iKhokha leadership team,” says Matt Putman, CEO and co-founder of iKhokha.
“Joining forces with Nedbank gives us the platform to scale our impact, further accelerate product innovation and unlock new value for our merchants. There is great alignment across both leadership teams on the synergies that can be unlocked through this transaction, and we believe our combined strengths will result in a truly differentiating and highly-competitive value proposition for SMEs in the market.
“It also opens the door for us to explore expansion into other strategic markets on the continent. We remain committed to our mission of empowering entrepreneurs and building tools that help small businesses thrive.”
The acquisition includes a management lock-in to ensure managerial continuity and alignment with long-term growth objectives, according to the statement.
This year, iKhokha co-founded the Association for South African Payment Providers (ASAPP) alongside other fintech companies, including Altron, Hello Group, Lesaka, Network International/Payfast by Network, Peach Payments, Shop2Shop and Yoco.
ASAPP's goal is to create a progressive digital payments ecosystem in South Africa by promoting fair access, reducing costs, and enhancing transparency and customer mobility.
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