One of the major financial services providers, Nedbank Group, has announced that it has entered into a binding agreement to acquire 100% of fintech innovator iKhokha.
The green bank said this in a statement released on Wednesday, explaining that the agreement was in an all-cash deal for approximately R1.65bn (subject to certain adjustments upon conclusion), adding that the move was a significant milestone in Nedbank’s strategy to deepen its support for small and medium-sized enterprises (SMEs) through digital innovation and inclusive financial services.
The iKhokha sells card machines, point-of-sale systems, and thermal point-of-sale printers, among others.
Subject to regulatory approvals
Nedbank said the transaction is subject to customary regulatory approvals. And it is expected to conclude in the coming months.
Founded in 2012, iKhokha has established itself as the leading trusted partner to South African entrepreneurs. It offers a suite of affordable, accessible SME cash advance and payment and business management tools.
The acquisition will see iKhokha become a wholly owned subsidiary of Nedbank. This while it will continue to operate under its own brand and leadership team.
“This acquisition is a natural evolution of our existing relationship with iKhokha. And we are incredibly excited to welcome iKhokha to our Nedbank family,” said Ciko Thomas, Group Managing Executive for Personal and Private Banking.
“The acquisition is a pivotal moment in our strategy to empower the SME market. By combining their innovative technology with our deep banking experience, we will provide
small business clients with the best-in-class tools they need to thrive.
Empowering entrepreneurs
“We believe that empowering entrepreneurs is essential to building a thriving and inclusive economy,” said Jason Quinn, Nedbank Group CEO.
“iKhokha’s mission and technology align perfectly with our vision for digital transformation in the SME sector. Together, we will unlock new opportunities for growth and financial inclusion in South Africa and potentially abroad,” said Quinn.
The transaction also marks a successful exit for iKhokha’s long-standing investors. These are Apis Partners, Crossfin Holdings, and the International Finance Corporation (IFC). These investors played a pivotal role in supporting the management team in scaling iKhokha’s operations and product innovation.
Their exit reflects the strong performance and strategic value of the business. It also underscores their confidence in Nedbank’s ability to take iKhokha into its next phase of growth.
Crossfin has backed the iKhokha founders from the initial concept in early 2012. It helped it to become a uniquely positioned business with an attractive growth profile and much to offer the South African SME market.
Great new home for business
Dean Sparrow, CEO of Crossfin Holdings, said: “We are extremely proud of what has been achieved by the iKhokha team to date. And the fact that we have found a great home for the business, its people, and the SME market it services.”
Matteo Stefanel and Udayan Goyal, managing partners at Apis Partners, added iKhokha has gone from a promising fintech start-up to one of South Africa’s leading payment providers.
“Our partnership with Matt and the team has been deeply rewarding. Not only in terms of the company’s rapid growth, but also its powerful impact on thousands of South African SMEs.
“As iKhokha enters its next phase under the ownership of Nedbank, we’re confident it will continue to scale its mission. That of driving financial inclusion and empowering entrepreneurs across the country,” they said.
“This is a proud moment for both the founders and the broader iKhokha leadership team,” said Matt Putman, CEO and co-founder of iKhokha.
Accelerate product innovation
“Joining forces with Nedbank gives us the platform to scale our impact. To further accelerate product innovation, and unlock new value for our merchants.
“There is great alignment across both leadership teams on the synergies that can be unlocked through this transaction. And we believe our combined strengths will result in a truly differentiating and highly competitive value proposition for SMEs in market.
“It also opens the door for us to explore expansion into other strategic markets on the continent. We remain committed to our mission of empowering entrepreneurs and building tools that help small businesses thrive.”
The acquisition includes a comprehensive management lock-in. This is to ensure managerial continuity and alignment with long-term growth objectives.
