Founders and early investors in technology and fintech companies are cashing in on their investments as larger companies with deeper pockets in the financial services sector pursue fintech groups to gain scale in the rapidly growing digital economy driven by online payments.
The valuation outlook for fintech groups is looking rosy as the SA Reserve Bank ushers in a new era with an imminent overhaul of the payments regime, which will include non-banks entering the clearing and settlement system and fintechs further challenge the hegemony of traditional banks.
In August, Nedbank acquired iKhokha, one of Africa’s fastest-growing fintech companies, for R1.65bn in one of the biggest fintech deals of the year.
The Durban-based iKhokha was co-founded by Matt Putman, Ramsay Daly and Clive Putman, and since its establishment in 2016 it has redefined the way SMEs do business through mobile innovation.
Endeavor SA said the iKhokha deal and a string of other fintech deals this year, including those involving DocFox, Adumo, Ratality and Bank Zero, are the missing piece that will help unlock fresh capital for the region’s scale-ups, long hampered by a shortage of exit opportunities.
The company, which facilitates access to capital through introductions to investors in its global network, said the transactions are not isolated, as across Africa there have been 21 exits recorded in the first half of this year.
Endeavor SA was founded by the country’s entrepreneurial royalty: Adrian Gore, David Frankel, Isaac Shongwe and Paul Harris. Its portfolio raised R4bn in capital last year. The company’s 29 SA early-stage scale-up entrepreneurs have delivered annual revenue growth of 44% between 2021 and 2024.
Alison Collier, MD at Endeavor, said exits are the cornerstone of a healthy venture ecosystem, as investors only commit if they know they can also exit at an attractive price.
“Recent acquisitions across fintech and other sectors show that liquidity is returning, reassuring investors that African scale-ups can deliver strong returns. This momentum will be critical to unlocking the next wave of growth capital into the ecosystem,” Collier said.
“When founders succeed, they attract new capital, build global companies, and create thousands of jobs locally. The wave of exits we are now seeing signals that SA’s scale-up economy is maturing in a way that will benefit not just investors but the country’s workforce and society at large.”
“When founders succeed, they attract new capital, build global companies, and create thousands of jobs locally.
— Alison Collier, MD at Endeavor
The JSE- and Nasdaq-listed fintech group Lesaka Technologies in June announced a deal to buy Bank Zero for R1.1bn, in a transaction that will see it launch a suite of foreign currency products that will allow it to play in the competitive cross-border remittances market.
Once the transaction is complete, Bank Zero chair Michael Jordaan will join Lesaka’s board, while Yatin Narsai will continue as Bank Zero CEO.
Collier said the high-profile exits, which mirror a surge of activity in global markets, send the right signal as global corporations shift cash from venture capital to AI and data infrastructure.
“Historically, African entrepreneurs have faced greater hurdles in attracting institutional capital due to the scarcity of exits. Without liquidity events, even high-growth companies struggled to prove their investability. The recent uptick in acquisitions demonstrates a turning point, reinforcing Africa’s appeal at a time when global markets are searching for new growth frontiers.”
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