FinTech: In South Africa, Nasdaq-Listed Net1 Acquires Connect Group For $242M
Both companies are South African fintechs.
Net 1 UEPS Technologies Inc (NASDAQ: UEPS) has agreed to acquire all of South African fintech Connect Group for US$242 million in a bid to expand its market and acquire scale as the biggest fintech platform in the country. (Seeking Alpha)
The acquisition will bring an estimated 1.4 million informal MSMEs into Net1’s addressable market. Connect already serves over 35,000 informal MSMEs. Secondly, the product offerings of the two companies are complementary and will improve economics through combination.
Net 1 will also benefit from the high growth of Connect’s business across the metrics of throughput, revenue, earnings and cash flow.
“Our vision is to transform Net1 into the leading South African fintech platform, offering payment processing and financial services to underserved merchants and consumers,” said Chris Meyer, Group CEO of Net1. “The acquisition of the Connect Group transforms our merchant offering, MSME footprint and growth trajectory, while also uniquely positioning us to be the South African market leader serving both merchants and consumers.”
Connect Group: Solid track record of growth
“I am very confident that this transaction fast tracks the combined businesses which together, now has the essential and differentiated building blocks required to deliver on the focused objective of being the leading South African fintech platform,” said Steven Heilbron, CEO of the Connect Group.
Connect’s offerings combined to generate net revenue of approximately ZAR 1.1 billion ($66.6 million), which represents a historic three-year compound annual growth rate of approximately 30%. Furthermore, the business delivered an historic three-year compound annual growth rate in EBITDA in excess of 40% for its financial year ended February 28, 2021.
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