Financial services and technology group Net1 has secured regulatory approvals to acquire payments platform Connect Group in a R3.7bn deal that will expand its footprint in the micro, small and medium enterprises sector in Southern Africa.
Competition authorities in SA, Botswana and Namibia have approved the transaction, Net1 said on Friday.
In SA, Net1 is required to fulfil public interest conditions imposed by the Competition Tribunal as the part of the transaction. It has to increase the spread of ownership by historically disadvantaged people and workers, as well as invest in supplier and enterprise development.
Net1 is also required to establish an employee share ownership scheme, which will give workers a shareholding in Net1 equal in value to at least 3% of its issued shares.
The shareholding will increase to 5% if, within 24 months of the implementation date of the transaction, Net1 generates a positive net profit for three consecutive quarters.
However, the final structure of the employee share ownership scheme is subject to shareholder approval and other regulatory and governance approvals, Net1 said.
Botswana and Namibia gave the deal the thumbs up without conditions.
“This approval is a major milestone towards the completion of the transaction, and we are looking forward to integrating Connect Group into Net1,” Net1 CEO Chris Meyer said in a statement.
Founded in 2006, the Connect Group provides fintech solutions to nearly 44,000 micro, small and medium enterprises (MSMEs)
Product lines include a prepaid value-added services platform branded Kazang, as well as a digitised cash management platform branded Cash Connect. It also includes a merchant lending platform branded Capital Connect.
Net1 has an established presence among formal enterprises, but does not now serve any of SA’s estimated 1.4-million informal MSMEs. The Connect Group has significant opportunities for continued growth within its current addressable market, estimated at more than R100bn in SA, Net1 said.
With Karl Gernetzy
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