Nedbank Group has agreed to pay roughly R1.65 billion in cash, subject to final adjustments, to acquire 100 per cent of South African fintech company iKhokha Proprietary Limited.
The acquisition, announced on Tuesday, is anticipated to be completed in the upcoming months, pending customary regulatory approvals.
Nedbank to improve standing in SME’s financial services
According to the group, the transaction is a component of Nedbank’s plan to use inclusive financial services and digital innovation to improve its standing in the small and medium-sized business (SME) market.
“We believe that 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,” said Nedbank Group CEO Jason Quinn.
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“Together, we will unlock new opportunities for growth and financial inclusion in South Africa and potentially abroad.”
iKhokha to continue functioning under current name and management team
Although iKhokha will continue to function under its own name and management team, it will become a fully owned subsidiary of Nedbank upon the completion of the acquisition.
Nedbank claims that in order to guarantee continuity and alignment with long-term growth goals, the agreement contains a thorough management lock-in.
“Joining forces with Nedbank gives us the platform to scale our impact, further accelerate product innovation, and unlock new value for our merchants,” said Matt Putman, co-founder and CEO of iKhokha.
“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 market,” he added.
iKhokha’s significant milestone
iKhokha was established in 2012 and offers SMEs digital payment solutions, card machines, and business management tools.
The fintech has disbursed over R3 billion in working capital to the SME sector and processes over R20 billion in digital payments annually.
Since 2016, Apis Partners, a growth-stage private equity investor, has supported iKhokha. Apis concentrates on investments in high-growth markets in financial services and associated technology.
According to Nedbank, the acquisition marks a critical turning point in its growth strategy for SMEs, which aims to provide entrepreneurs with technology-driven, reasonably priced, and easily accessible financial services.
Following the announcement, Nedbank Group shares increased by about 2 per cent on Wednesday morning.