SOUTH AFRICA: Lesaka to acquire fintech company Adumo for $85.9 million

Lesaka has signed a new deal to buy local fintech operator Adumo for R1.6bn through a combination of stock and cash, indicating its strategy of acquisitive growth remains in place.

On Wednesday, the JSE-listed fintech group said it had signed a definitive agreement to acquire Adumo for $85.9m (R1.59bn). The purchase consideration will be settled through the combination of 17,279,803 new Lesaka shares to be issued to Adumo’s shareholders plus $12.5m, or R232m, in cash, funded by internal cash resources and external financing.

Adumo’s ultimate shareholders include private equity player Apis Partners, African Rainbow Capital — the largest shareholder of Crossfin — the International Finance Corporation (IFC) and Adumo management.

Lesaka provides informal retail merchants with point-of-sales devices with which they can pay their suppliers and sell products, including airtime and electricity. It has a primary listing on the Nasdaq and a secondary one on the JSE.

Adumo is SA’s largest independent payments processor and has been around for more than 20 years.

Lesaka, valued at R5.251bn on the Nasdaq and JSE, said the acquisition reinforced its position as a “natural consolidator of Southern African fintech and will enhance our strengths in both the consumer and merchant markets”.

The group recently acquired Touchsides from Heineken SA for an undisclosed sum.

That acquisition is expected to boost the group’s Kazang footprint in the tavern industry in SA’s informal market. Kazang is a payments platform that includes the buying and selling of airtime and micro-lending.

This adds to the buyout of the Connect Group in April 2022 through a R3.7bn deal that is set to expand its footprint in the small, medium and micro enterprises sector in Southern Africa.

Lesaka said that once the Adumo transaction was complete its ecosystem would serve 1.7-million active consumers and 119,000 merchants, and process more than R250bn in throughput — made up of R40bn from cards, R100bn in value added services (VAS) and R110bn in cash — per year. Additionally, the group would have more than 3,300 employees operating in five countries: SA; Namibia; Botswana; Zambia; and Kenya.

“We are thrilled to welcome the Adumo team into the group and Adumo CEO Paul Kent onto our executive leadership team, said Lincoln Mali, CEO of Lesaka Southern Africa.

“Adumo’s customer base provides us with access to more than 245,000 consumers and to payment technologies that we can incorporate into our existing operations. The pending acquisition of Adumo is another significant milestone for Lesaka as we build the top fintech platform in Southern Africa.” The transaction is subject to shareholder and regulatory approvals.