Interswitch to revive its Africa venture fund, CEO confirms – ClearTips
Pan-African FinTech Company Interswitch There are plans to re-fire its corporate venture arm, according to CEO Michelle Allegby – who spoke at ClearTips Disrupt on Wednesday.
The Nigerian founder did not offer much new take on the expected IPO of the Lagos-based firm, but revealed that Interswitch would revive investment in African startups.
Founded by Allegbe in 2002, Interswitch pioneered infrastructure to digitize Nigeria’s then predominantly cash-based economy. The company now provides a lot of rail for Nigeria’s online banking system that serves Africa’s largest economy and population of 200 million people. Interswitch has expanded to offer personal and business payment products in 23 Africa countries.
After a $ 200 million equity investment by VTech, the fintech firm achieved unicorn status in 2019 and gave it a valuation of $ 1 billion.
Revived enterprise investment
Interswitch, which is beyond the startup phase, started a $ 10 million venture in 2015, which has been dormant since 2016, after it acquired Vanso — a Nigerian fintech security company.
According to Eligbe, Intrustwich will soon return to the startup’s stake and takeover business. “We have just certified a team and started planning to recreate this kind of investment.”
He offered a glimpse into the focus of the new fund. “This time we want to make financial investments and also take advantage of Interswitch’s network and dispose of these companies,” Eligbe told ClearTips.
“The companies we invest in will be very selective. They should be companies that can clearly add interswitch value as a unit. They should be companies that help accelerate growth based on what we do and the customers we have.
Recent venture developments in African technology have pressed the possibility of bringing Interswitch back to the investment sector. As an ecosystem, VC on the continent has grown by a factor of (approximately) more than $ 2 billion in 2019 over the last five years. But most of them come from single-unit investment funds, while corporate venture funds (and technology) M&A activity) remains mild. This has been shifted over the past several months and has occurred throughout Uptown African FinTech around entities that may be seen as interswitch competitors.
In July, Network International of Dubai acquired Kenya Mobile payment processing company DPO paid for $ 288 million. Shortly after the acquisition, DPO CEO Eran Feinstein said the company would make more African acquisitions on its own. In June, another mobile-money payment processor, MFS Africa, acquired digital finance company Beonic. And in August, South Africa’s Standard Bank – Africa’s largest by assets and lending – acquired a stake in fintech security firm TradeSafe.
Since the rise of Safaricom’s flagship M-Pesa mobile money product in Kenya, fintech in Africa has become infinitely larger and more competitive. There are hundreds of startups in the region and now receive around 50% of all total investment on the continent.
The large population of Africa and vulnerable consumers and SMEs is being brought online, chasing opportunities from investors and founders. According to World Bank data, 66% of the 1 billion people in Sub-Saharan Africa do not have a bank account, and mobile-based finance platforms have presented the best use-cases for transferring to the region.
Interswitch has established itself as a leader in Africa’s digital finance race. But it’s hard to imagine how it can sustain or grow that role without an active enterprise branch that invests in and acquires innovative, young fintech startups.
No news on IPO
Elgbe had less to offer on Interwich’s long-awaited IPO. Asked if the company still planned to list publicly, he offered a non-committal answer. “At this time we are focused on growing the business and creating value for our customers and this is our primary focus.”
When an IPO is still a possibility, Eligbe confirmed it pressed “yes or no”. “We have private equity investors and they want to exit. She said.” When it’s time for their exit there are different options on the table and an IPO is an option. “
An Interswitch IPO has been talked about for years. In 2016, Allegbe called ClearTips a dual-listing on the Lagos and London Stock Exchanges. Then word came through other Intraswitch channels that in 2017 it was delayed due to recession in Nigeria and currency instability. In November 2019, a source with knowledge of the situation told ClearTips on the backdrop, “An IPO is still very much in cards; it’s likely to happen sometime in the first half of 2020.” followed by the Kovid-19 crisis and the global Faced with an economic downturn, it probably delayed Intervitch’s IPO plans again.
If and when the company goes public, it will be a major event for Nigerian and African fintechs. No VC-backed fintech firm on the continent is listed globally. The exit prospect for Interswitch’s investors will attract Nigeria and more chancellors from key funds to Africa – many of whom remain on the fence about startup opportunities on the continent.
Focus on africa
On global product expansion, Interswitch plans to maintain an African focus for now, Alegbe explained. “There are substantial opportunities for Interswitch on the continent. We want to be in as many African countries as possible… and position Interswitch as the (financial) gateway to the continent, ”he said.
Allegbe explained that the company will continue to work through alliances with major financial services firms to open up global financial reach for its African customer base. In August 2019, Interswitch launched a partnership, which allows its Veer card holders to make payments on Discover’s global network.
CEO Michelle Alegbe Finished its dissolution session with some approach to balance the stigma and prospects of doing business in Nigeria. In recent years the country has moved to Africa to become an informal hub for large technological expansion, VC investment, and startup formation. But Nigeria has a difficult operating environment regarding infrastructure and is often associated with political corruption and instability in its northeastern region due to the Boko Haram insurgency.
“Nigeria has a very large population and a huge market. We have a lot of challenges that need to be resolved, but it makes sense to me that a lot of money is finding its way to Nigeria because there is opportunity, ”he said.
Elegbe’s advice to tech investors looking at the country, “Don’t take a short-term view. There are good people on the ground who are doing a fantastic job – honest people who want to make an impact. You need to look for those people. “