Absa Group, a prominent financial services provider in South Africa, has emphasised the potential for African FinTech startups to explore public listings on local exchanges.
Adesoji Solanke, head of FinTech investment banking origination at Absa Securities UK, highlighted the opportunity for FinTechs to raise capital through initial public offerings (IPOs) on local exchanges, according to a report by Bloomberg.
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Local Listings as an Exit Strategy
Amid a global decline in venture capital funding, listing on local exchanges could serve as an exit strategy for FinTech shareholders, especially those with significant revenue in a single local currency. Solanke noted that there are sizable pension pools in some African countries, making local listings a viable option. Additionally, Africa’s rapidly growing population, particularly its tech-savvy youth, has led to the emergence of a vibrant FinTech industry.
While companies like Flutterwave, Chipper Cash, and Interswitch have hinted at possible listings in the UK or the US, listing locally can offer advantages such as familiarity with local investors and less stringent listing requirements. Several African FinTech companies, including E-Finance for Digital & Financial Investments, Fawry for Banking & Payment Technology Services, eTranzact International, and Lesaka Technologies, have already been listed on local exchanges.
Considerations for International Listings
Solanke mentioned that African FinTech firms with geographically diversified revenues and strong growth potential could also consider international listings. Major mobile phone companies in Africa, such as MTN Group, Vodacom Group, and Airtel Africa, have significant FinTech units that could potentially go public. MTN sold a stake in its FinTech unit to Mastercard last year, valuing the business at $5.2 billion, while Airtel’s mobile money unit was valued at $2.7 billion in 2021.
Addressing Concerns and Opportunities
Exchanges in Nigeria and Kenya are addressing concerns related to listing and foreign currency preferences of private equity and venture capital firms. Solanke mentioned collaboration with institutional investors to educate them about investing in African tech companies.
Visa’s Africa FinTech Accelerator Program
In another recent development, Visa announced that it is accepting applications for the second cohort of its Africa FinTech Accelerator program until Feb. 29. This program aims to provide mentorship, training, and networking opportunities to Series A startups operating in Africa, further highlighting the growing opportunities and support for FinTechs in the region.