Financial services and technology group Net1 UEPS has sold its remaining stake in Liechtenstein-based Bank Frick for $30m (R450m), which will be reduced by $3.6m as it settles obligations and terminates agreements.
Net1 had said in 2019 it would pay $46.4m to exercise its option to acquire an additional 35% stake in Bank Frick, giving it 70%, but called this off in a bid to save cash and focus more on Africa.
In 2020 it had paid a $17.5m cancellation fee after terminating its agreement.
The JSE- and Nasdaq-listed firm had been diversifying into new geographies as it sought other revenue streams after the loss of a multibillion-rand contract to distribute social grants in SA.
It has however said its sees “compelling opportunities” in Africa, where it is now focusing.
“The sale of our interest in Bank Frick is a milestone in the execution of the corporate strategy that we announced in September 2020,” said Alex Smith, Net1’s CFO and interim CEO.
“The sale of this interest and the previously announced closure of the International Payments Group will significantly reduce the cash burn and operating losses from Net1’s noncore operations,” Smith said.
Net1 uses its banking and payment technology to distribute low-cost financial and value-added services to small businesses and consumers it says are underserved.
The company also provides transaction processing services, including being a payment processor and bill payment platform in SA.
In a trading update for the three months to end-December, the group’s second quarter, Net1 said revenue fell 12% in rand terms year on year, primarily due to fewer prepaid airtime sales and lower account fee revenue.
Revenue fell 17% in dollar terms to $32.3m, with the group reporting a net loss of $4.5m, from a loss of $0.2m previously.
The group said the effect of Covid-19 during the quarter was less severe than that of the four months to end-June, though SA had since moved to a level 3 lockdown at the end of December.
Net1 said it had already seen an increase in claims in its life insurance business, which it believed is linked to the second wave, and there is a risk of increased credit losses in its micro-lending business.
At the end of December, the group had unrestricted cash of $206m, and no debt.
With Mudiwa Gavaza
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