TymeBank, SA’s first fully digital bank, may list on a major stock exchange in the next four to five years, as its valuation approaches R20bn, its co-founder and CEO Coen Jonker says.
Speaking to Business Day Spotlight, a podcast, Jonker said the bank, which launched in 2018 and has attracted more than 8-million customers, is now valued at about $965m (R17bn) after raising $105m in a funding round in recent months.
“We actually would like to list the business but the time is not right yet. I think ... four to five years from now, watch this space,” Jonker said. “The big question for us is what would be a good place to list it, and you know, is the JSE the best market to list, or should one consider maybe something like Nasdaq or New York Stock Exchange or London Stock Exchange? So we are keeping an open mind, but I’d love to list the business at some point in the future.”
TymeBank, which is majority-owned by African Rainbow Capital, a company founded by billionaire Patrice Motsepe, offers low-cost banking services through a network of kiosks and retail partners, without the need for branches or paperwork. It counts Chinese internet titan Tencent, British International Investment, and the Ethos AI Fund as backers.
Jonker’s comments come almost two months after African Rainbow Capital called into question the merits of being a publicly traded company on the JSE as it grapples with a hefty discount to its underlying assets, which include data-focused mobile network operator, Rain.
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African Rainbow Capital’s intrinsic net asset value (NAV) stood at R15.3bn in June, more than double its market capitalisation of R7.3bn and heaping pressure on the company’s management led by Johan van Zyl and Johan van der Merwe to tackle the mispricing of its assets.
Listing TymeBank separately has the potential to address this financial inefficiency as it might attract specialist investors who want exposure to fintech assets rather than a hodgepodge of assets that range from mining to agriculture.
With more than 8-million clients, TymeBank is in the upper echelon of the vast, multitrillion-rand banking industry. But it is one thing to have clients, and quite another to make money from them. The bank, which makes money from transaction fees, lending and cross-selling products such as insurance, aims to break even by 2024 and reach profitability by 2025.
“We are progressing well and we certainly make less money out of our customers than the big banks do, but we also run a much lower cost,” Jonker said. “Our operating costs are about a tenth of the operating cost of the big banks, which means that we can afford to charge our customers less, we can afford to give them better interest rates.”
Still, TymeBank’s credit card offering has not lived up to expectations, Jonker said , adding that his team will soon review the product and make it more attractive to customers.
“To be frank with you, it hasn’t been a very good product for us. We don’t have a lot of customers on it and we’ve done it very, very conservatively and it’s something that we want to go back to the drawing board to see how we can [repackage it],” he said. “But you know our credit cards are performing well from the perspective of the bad loans, but not as well as we’d like.
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