This could be a major victory of 2019 for Nigerian startups. For the second time in two years, Interswitch is signaling it is now ready to open its share portfolio up for public subscription. The unicorn startup is riding on the wings of the recent relatively successful listing by MTN Nigeria and Airtel Africa. This is seventeen years down the line for the digital payment solution.
Here Is What You Need To Know And How To Get Ready For Interswitch’s Shares
- This could be a reality this time. Interswitch has already hired JPMorgan, Citigroup, Standard Bank for the share sale.
- This listing could value Helios’s Interswitch at up to $1.5 billion
- The listing would happen on the Nigerian Stock Exchange at the same time it is happening on the London Stock Exchange.
- JPMorgan Chase & Co., Citigroup Inc., and Standard Bank Group Ltd. are among the firms working on an initial public offering, which may value the financial technology company at $1.3 billion to $1.5 billion, according to reliable sources.
- Interswitch had earlier shelved its plans to list in 2016 after the price of crude oil fell dramatically, causing a contraction in Nigeria’s economy.
This Listing Is Drawing An Unclear Path For Africa’s Digital Startups
Just recall Fawry, the Egyptian startup poking at IPO. The startup was acquired by Helios Investment Partners halfway into its journey. Interswitch, originally founded by Mitchell Elegbe also sealed the same fate in 2011 when Helios Investment Partners, a private equity firm dedicated to making growth investments across Africa bit two-third hard into the startup and subsequently acquired a majority stake in the payment startup. Since then, Helios Investment has become Interswitch’s largest shareholder.
This would, of course, leave a big question on the longevity of African-led startups, and whether the popular exit strategy most startups in Africa are resorting is not acquisition.
Helios is among several private funds that specialize in investing in African assets as the economic recovery taking place across the continent bolsters investor sentiment and infrastructure plans.
A Look At Interswitch
Interswitch facilitates the exchange of value between service providers by providing a secure shared payment infrastructure and integrated message broker solutions for financial transactions, eCommerce, telecommunications value-added services, eBilling, payment collections, and disbursements. The company developed and administers Verve, the leading card scheme in Nigeria.
The Verve card, which is currently issued by banks in Nigeria, is the first and only chip and PIN card accepted across multiple payment channels including ATMs, Point of Sale (PoS) terminals, online, mobile and at banks, and enjoys the largest range of value-added services.
The company has been at the forefront of the development and growth of the e-payment sector in Nigeria, which is evidenced by its unique position of being the only switching and processing company connected to all banks in the country as well as to over 10,000 ATMs and 11,000 PoS terminals.
Aside from this, the company is the leading processor for MasterCard and the market leader in merchant acquiring/PoS, a segment that is still emerging and has the potential for tremendous growth in Nigeria.
The completion of the switchover from magnetic strip cards to chip and PIN cards in 2010, is expected to further accelerate growth and usage of e-payments across the country. Nigeria is the first country in Africa to have completed this migration and is one of the few countries in the world to have completed the migration under a year.
See Also: ₦26bn Deal: How Interswitch Plans To Disrupt Nigeria’s Transport Business
Why Are African Firms Rushing To List In London?
Interswitch’s dual listing in the U.K. and Nigeria is merely repeating what Airtel Africa Plc, the wireless carrier and a subsidiary of Indian parent Bharti Airtel Ltd did recently by simultaneously listing on the London and Nigerian Stock Exchange.
Recall that Jumia Technologies AG, dubbed the Amazon of Africa, listed in New York earlier this year, while Dubai-based payments firm Network International Holdings Plc went public in London. All of these recent events may not be unconnected with the recent invitation by the London Stock Exchange to investors around the world, particularly in Africa to come to invest in the Exchange.
Officials from the London Stock Exchange recently completed a roadshow in a bid to boost the LSE’s 115 African listings. The exchange is banking on partnerships with African exchanges, including those in Nigeria and Kenya, for dual listings, according to Director of Emerging Markets and International Markets Ibukun Adebayo.
“If a company has an international strategic growth plan, then the LSE is a perfect vehicle for the company to come and list,” Adebayo said Tuesday in an interview in Nairobi. “If the company is purely domestic and it needs to raise money in the domestic market and increase the number of investors available to it, then the LSE can help work with local partners.”
Firms already included in the LSE’s listing of Companies to Inspire Africa, which the exchange describes as the continent’s “most inspirational and dynamic private, high-growth companies are:
- South Africa: Ad Dynamo International, Coega Dairy, Compuscan
- Nigeria: Afriland Properties, Alpha Mead Group, ARM Life
- Kenya: Acorn Group, BitPesa, Cellulant Kenya, Chandaria Industries, D.light
- Ivory Coast: Azalai Hotel Abidjan, Cipharm SA, Clinique Procréa, Agriex Côte d’Ivoire
- Angola: Aldeia Nova, Angola Energy Greentech, Kora Angola, WEZA
- Egypt: Cairo Three A, Carbon Holdings, Eagle Chemical Group, Sambo Metals
- Morocco: 10 Rajeb, Bricoma, Damandis Maroc, Ama Detergent, Medafrica Systems
There are 360 companies from 32 different countries across the continent, boasting an impressive average compound annual growth rate of 46 percent, up from 16 percent last year, according to Global Finance.
It says on average, each firm employs over 350 people, with an average compound annual employee growth rate of 25 percent.
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.