TymeBank’s acquisition of Retail Capital has been authorised unconditionally by the South Africa Competition Tribunal.
TymeBank provides personal and commercial transactional accounts, savings accounts, and value-added services such as credit cards, prepaid, health insurance services, and burial coverage, according to the company.
Retail Capital is a fintech company that offers unsecured lending to small and medium-sized businesses as well as asset financing.
TymeBank CEO Coen Jonker.
TymeBank will have sole control of Retail Capital following the transaction.
TymeBank said in August that it planned to acquire Retail Capital in order to expand its commercial banking offerings.
Retail Capital will become a TymeBank division and the backbone of the company’s expanded business banking services.
“This acquisition will enable TymeBank to expand its offering to entrepreneurs to include working capital finance,” said TymeBank CEO Coen Jonker. “Retail Capital has acquired significant risk management experience over the past decade and through different economic cycles. They have an experienced team in place and their risk models and operational processes have been battle-tested and optimised to a significant degree for small-business funding.”
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert. As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard. You can book a session and speak with him using the link: https://insightsbyexperts.com/view_expert/charles-rapulu-udoh
China based Tencent, a globally leading internet and technology company, and United Kingdom based development finance institution and impact investor, have invested to the tune of $180 million into South African based Tyme, one of the fastest-growing digital banking groups in a Series B capital raise.
The investments from Tencent and CDC are pegged at an additional $70 million. Tyme, which has its roots in South Africa, is using the US$180 million it has raised to fund and grow TymeBank in South Africa and to fund GOTyme in the Philippines, where it has secured a digital bank licence in partnership with the leading Filipino conglomerate, Gokongwei Group, with the possibility of further international expansion.
Coen Jonker, co-founder of Tyme
The first part of Tyme’s Series B raise concluded earlier this year when it secured $110 million from Apis Growth Fund II, a private equity fund managed by Apis Partners LLP, and Gokongwei’s JG Summit Holdings (JG Summit).
The investments will enable Tyme to use its digital infrastructure to accelerate the rollout of financial services to TymeBank’s mass-market customer base. The two investor’s capital and expertise will also be used to improve Tyme’s ability to manage risk and support Tyme’s expansion into markets where CDC has a presence.
CDC’s investment in Tyme in South Africa is part of its strategy to support businesses that provide vital infrastructure, such as digital financial services, to traditionally underserved groups. African Rainbow Capital remains Tyme’s majority shareholder.
Coen Jonker, co-founder of Tyme commented: “This is a very welcome investment from Tencent and CDC. It is a clear vote of confidence in our digital banking offering as well as our leadership teams in South Africa, Singapore, and the Philippines”
“Tyme’s global footprint now includes a product development and engineering hub in Ho Chi Minh city, Vietnam and banking businesses in South Africa and the Philippines. We have successfully attracted a team of skilled people, which includes over two hundred engineers, and established strategy, business development, data, analytics and Artificial Intelligence (AI) functions in our global headquarters in Singapore.”
The investment by Tencent and CDC represents a strong endorsement for both TymeBank – as one of the world’s fastest-growing digital banks – and for South Africa’s banking sector overall. TymeBank is fully regulated and held to the same standards of safety and security as all other banks in South Africa. TymeBank is the first bank in South Africa to be operated fully off a cloud-based infrastructure network. It was also the first bank to be granted a commercial banking licence since 1999.
Commenting on the transaction, TymeBank CEO Tauriq Keraan said: “This is a momentous event for TymeBank. We look forward to continuing to demonstrate our strong strategic and execution capabilities to all our investors and to benefit from the deep global expertise that Tencent and CDC have accumulated through a multitude of investments in digital businesses. We are equally excited about the opportunity to pursue the synergies that exist between all investors and partners, ultimately to ensure added value for our customers.”
Dr Patrice Motsepe, Founder and Chairman of African Rainbow Capital, which is the majority shareholder of Tyme, said: “We are delighted to welcome Tencent and CDC as our new co-investors in Tyme. The ability to attract investors of this calibre is a testament to the global competitiveness of Tyme’s value proposition, and its management. The success of TymeBank in South Africa is an example of our innovation in financial services, and this is evidenced in our business model. We look forward to a long and successful relationship with Tencent and CDC.”
The finalisation of the investments is subject to conditions precedent and regulatory approvals.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
Barely two years since it was launched and with over 2.8 million customers, South Africa’s TymeBank is ready for fierce competition with traditional banks. In a record-breaking deal for an early stage fintech startup in Africa, the bank has announced it has raised $110m in private capital and that it has also teamed up with JG Summit, one of the biggest conglomerates in the Philippines, to apply for a local digital bank licence.
Coen Jonker, co-founder and executive chairman of TymeBank
“We believe that the future of digital banking in emerging markets is multi-country, to actually build a banking group where there is enough critical mass of customers,” said Coen Jonker, co-founder and executive chairman of Tyme.
Here Is What You Need To Know
The latest funding came mainly from private equity fund Apis Partners, with participation from JG Summit.
TymeBank plans to use the latest funding to expand its services across South Africa.
It also plans to use part of the investment to finance JG Summit’s launch of digital banking operations in the Philippines. Last November, Philippines’ central bank approved a set of new rules permitting digital banks to set up.
“For us, Philippines represents the best fit in terms of our business and operating model to expand, and JG Summit the best partner in terms of the retail capacity that they have and their loyalty programmes,” said Jonker.
Tyme also plans to fund its digital banking license as well as expansion to Malaysia which recently announced plans to issue up to five digital banking licenses after it issued a policy framework for online-only banks.
Following the new investment, the stake of South African billionaire Patrice Motsepe who is a majority owner in TymeBank (and who invested through his investment vehicle African Rainbow Capital) has been diluted, although he still remains the startup’s biggest investor.
Why The Investors Invested
Investment by Apis Partners in TymeBank aligns with its previous investments and geographical focus. The firm supports growth stage financial services and financial infrastructure businesses in Africa and Asia by providing them with growth equity capital. A majority of the firm’s portfolio companies are mainly fintech companies which are based in South Africa, Kenya, India, Malaysia, Singapore and other parts of Asia. In 2020, one of its portfolio companies, Kenya’s DPO Group, a leading, high-growth online commerce platform in Africa operating across 19 countries, was acquired by Network International, a leading enabler of digital commerce across the Middle East and Africa (MEA). The deal was a landmark for the African payments space.
“Apis focuses on driving financial services, with the help of innovation and technology, as a cornerstone of building better lives for people across the world. This was the key driver that pushed us to start Apis,” said Apis Partners founders Matteo Stefanel and Udayan Goyal.
On its part, JG Summit is one of the largest and most diversified Filipino conglomerates. The company owns Universal Robina Corporation, one of the fastest growing snack-food and beverage companies in the ASEAN region; Cebu Pacific Air, Philippines’ first budget airline and its largest domestic airline carrier with a growing international network reaching Asia, Australia, and the Middle East; real estate company. Robinsons Land Corporation; petrochemical manufacturing company, JG Summit Petrochemicals; a commercial bank, Robinsons Bank, among others.
Digital banks — and fintech generally — in Africa have been booming. Last year, Nigeria’s Kuda broke a continental record when it raised $10m in seed funding round. Kuda’s feat came in the wakes of the acquisition of its fellow country payments startup Paystack, in a deal reported to be worth more than $200m. Kenya-based Sendwave was also acquired earlier the same year by WorldRemit for $500m.
The high-growth potential of the startup must also have inspired investors in the latest round. With a customer base of 2.8 million acquired within a space of two years, TymeBank seems to have witnessed massive adoption in South Africa. As at June 2018, South African bank Capitec with 10.2 million customers topped the country’s entire banking industry in terms of number of active customers. This was followed by FNB at 8.15 million and the country’s largest bank by assets, Standard Bank at 8.12 million (this is despite the fact that Standard Bank, for instance, has been in existence since 1862).
This photo was true up to 2019. TymeBank has launched a digital lending product since then.
A Look At What TymeBank Does
Launched in 2019 by founders Coen Jonker, Rolf Eichweber, Tjaart van der Waalt, TymeBank is South Africa’s first digital bank. In February 2019, the bank launched its EveryDay transactional account bundled with a savings tool called GoalSave, its MoneyTransfer solution, and its TymeCoach App, which gives consumers free access to their credit report, supported by tips on how to make better decisions about the money.
Essentially, below are what the TymeBank product is bringing to the table:
The Bank Is Relying On Partnership As Its Strength Both For Money Deposit Or Withdrawal
TymeBank has created a network of partners including Pick n Pay and Boxer, with the former’s Smart Shopper program now fully embedded into TymeBank’s technology stack.
“We’ve partnered with companies whose business ethos aligns with what we want to do in the market, which is to do good. The customer will always be at the centre of our banking practices and going forward we will be doing some really exciting things with our partners, it will go way beyond just occupying floor space,” said Sandile Shabalala, TymeBank’s CEO who resigned in June, 2019.
The implication of joining forces with Pick n Pay and Boxer stores is that TymeBank now has access to a relatively significant distribution edge.
South Africa’s data-only mobile network Rain had also entered into a partnership deal with Tymebank to test the distribution of its SIM cards at Tyme kiosks, making it easier for its clients to sign up for a new service.
TymeBank’s Strategy Is Also To Make It Simple and Cheap For Customers
Indeed, signing up to the digital bank could cost little or nothing. No documents are required and no charges demanded.
To open an account, you need a South African ID number and a South African cellphone number, which the bank verifies through several questions and a One-Time PIN (OTP).
If the process is done at a kiosk, biometric data will be captured and compared to the data with Home Affairs, which is connected to the Tyme systems, and a free Visa debit card is issued immediately.
If done online, you will have access to your account, but it will be limited in how much you can transact until you go to a kiosk and “upgrade” your account (for free) to a full account through capturing biometric data and registering your residential address.
Getting a debit card is free and immediately.
Service Fee for new registration is free. There is no monthly account or withdrawal at Pick n Pay and Boxer stores, only R2 at other major retailers.
By July 2019, Customers Could Borrow From TymeBank Without Collateral
The digital bank also started piloting its unsecured term lending in July, 2019 and a credit card in partnership with consumer lending company RCS later in 2019. However, the Covid-19 pandemic and associated lockdowns put paid to the bank’s original plan to launch a standard unsecured lending product to customers in 2020
Instead, it has recently launched MoreTyme, a product which offers “interest-free shopping”, with customers paying half the price at the till point of partner retailers and the rest in two equal instalments over two months.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions. He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance. He is also an award-winning writer
