This is a major breakthrough for digital platforms across Africa. Less than 9 months after another technologically focused finance solution startup, Sarwa Capital, opened its shares for public subscription, Fawry, the Egyptian digital payment solution has announced it is ready to open itself to the public too by going on its First Public Offering (IPO )
Here Is What The IPO Is Going To Look Like
- Although the IPO would come late August 2019 or early 2020, Fawry is only ready to list 36% or more of its stake in the company on the Egyptian Stock Exchange.
- The company is eyeing proceeds between EGP 2 and 2.5 bn, which would make the offering the largest Egypt has seen since Emaar Misr raised EGP 2.28 bn in 2015.
- It would also value Fawry at EGP 4.5–5.5 bn. The offering will consist of a substantial international component, with the roadshow is set to cover the GCC, European, US, and South African markets.
- The offering will include a private placement for institutional investors and an initial public offering (IPO) for retail investors in Egypt at the same price, said investment bank EFG Hermes, which is managing the sale.
- The offer price is not yet known as the bank did not give any indication on the expected offer price.
- Fawry’s managing director this month told Reuters the company had begun preparing for the IPO on the Egyptian Exchange and that the process would be carried out in 2019 or early 2020.
- Financial advisor FinCorp, which Fawry hired to conduct a fair value study, is due to submit its report to the Financial Regulatory Authority within two weeks, after which the book-building process will begin, the sources hinted.
- Fawry’s expansion plans include increasing its points of sale, buying new payment machines, and developing Fawry Pay. Fawry also signed an agreement with Dubai Islamic Bank last month to launch a trial run of its services in the UAE this summer.
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Here Is Why This IPO is Significant For African Technology Focused Startups
Fawry is owned by local and foreign investment banks and was founded in 2009. About 8% of its shares are in the hands of management and employees.
Fawry’s network processed 600.1 million transactions last year with a total value of 34.2 billion Egyptian pounds ($2.1 billion), EFG Hermes said in its statement.
Fawry made core profit of 152 million pounds in 2018, up 41.2% on the previous year, indicating the increasing viability of FinTech business model across Africa.
The last IPO by a private company on the Egyptian Exchange was financing solutions business Sarwa Capital last October.
Indeed, this IPO shows that Fintech in Africa has increasingly become more profitable as banks. The ability to pay dividends from profits is a major factor every business owner should have in mind before deciding to embark on IPO, and with Fawry which basically runs online with little or no physical presence doing so, this is a major announcement that digitally-focused businesses have finally come to stay.
This notwithstanding, so much credit has to go to the acquisition that happened as far back as 2015. In 2015, a consortium of international financial investors acquired a majority stake in Fawry, a deal that valued the company at EGP773 million (US$100 million) and saw the company adopting an expansion strategy outside of Egypt. The investors are the Egyptian-American Enterprise Fund (EAEF), pan-African private investment firm Helios Investment Partners, and the International Finance Corporation.
* $1 = 16.5600 Egyptian pounds
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.