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Interswitch investors set to receive $110 million on a 15% sell down

After selling 15 percent of their overall stakes in Interswitch to Leapfrog Investments and Tana Africa Capital, Helios, Visa, and other investors would receive $110 million.

The new investors’ investment brings the total number of Interswitch investors to five, including Helios, which has a two-thirds share in the company, Visa, which purchased a 20% stake in the company, Leapfrog Investments, Tana Africa Capital, and other investors.

According to the corporation, the selldown is intended to broaden the investor base rather than a loss of faith by private equity group Helios.

“Normally, private equity firms invest and exit after five years but Helios has stayed longer than that,” a source told BusinessDay.

Helios Investment Partners announced in 2010 that it had purchased two-thirds of InterSwitch. In 2010, the payment company had just finished the transition from magnetic strip cards to chip-and-pin cards.

Visa also stated in 2019 that it had purchased a 10% stake in Interswitch for $200 million. The payment startup was valued at $1 billion after the investment, making it Africa’s first unicorn in the fintech industry.

Interswitch plans to list on the stock exchange outside of Nigeria. According to the insider, the proposal is still on the table and might happen if Helios decides to leave the company entirely.

In a statement, Interswitch Group CEO Mitchell Elegbe said he was “glad to have LeapFrog and Tana on board, as we continue to collaborate to advance the future of the African payments sector.”

Interswitch’s last publicly publicized funding round, when Visa paid $200 million for a 20% share in the company, was almost three years ago. Interswitch is one of Africa’s major electronic payments and infrastructure companies, valued at $1 billion at the time of writing.

The fintech, which is well recognized for its point-of-sale terminals, online consumer payment platforms, Quickteller, and Verve, Africa’s largest domestic debit card program, drives much of the rails for Nigeria’s internet banking system (issuing over 35 million active cards since launch).

Interswitch announced its desire to go public for the first time in 2016. CEO Elegbe told TechCrunch in an interview that year that the company would pursue dual-listing on the London and Nigeria stock exchanges.

In 2019, reports about the 20-year-old fintech company’s IPO on a major market surfaced. However, after receiving funding from Visa, that proposal appears to have been shelved.

A triumph for the African tech ecosystem is an Interswitch exit. It is also a win for the corporation, its executives, and, in particular, its largest shareholder, Ignite Holdco Limited of the United Kingdom (made up of Helios Investment Partners and TA Associates).

While that isn’t happening right now, Ignite Holdco has found a quick fix. In addition to injecting new funds into Interswitch’s operations, LeapFrog and Tana will acquire shares from current shareholders, notably Ignite Holdco Limited.

LeapFrog and Tana aim to work with Interswitch management to continue to advance the company’s pan-African strategy, which includes acquiring new clients and developing new products to promote a financial inclusion goal.

For more than two decades, Interswitch, a pioneer in the African payments ecosystem, has disrupted the cash economy, driven digital payments, and promoted equitable financial inclusion in Nigeria.

In a statement, LeapFrog Investments partner and head of Africa financial services Karima Ola said, “This investment by LeapFrog validates the outstanding talent at Interswitch and how well-positioned it is to grab the significant opportunity in Africa’s growing digital payments market.”

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