Financial services and technology group Net1 has inked a R3.7bn deal to acquire payments platform Connect Group, adding a base of more than 40,000 merchants and expanding its footprint into SA’s informal sector.
The JSE and Nasdaq listed group, which has a market value of R4.7bn, said another benefit would be the merging of skilled teams with complementary expertise. The deal, expected to be concluded by the end of March 2022, would also fill gaps in Net1’s product offering to customers it says are underserved by SA’s traditional banking system.
Founded in 2006, the Connect Group provides fintech solutions to nearly 44,000 micro, small and medium enterprises (MSME) in Southern Africa, in the formal and informal sectors.
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.
“The acquisition of the Connect Group transforms our merchant offering, MSME footprint and growth trajectory, while also uniquely positioning us to be the SA market leader serving both merchants and consumers,” said Net1 group CEO Chris Meyer in a statement.
The transaction is expected to be concluded in the quarter ending March 2022, and is subject to regulatory approvals.
Net1’s shares were trading 4.7% higher at R86 in morning trade on Tuesday, having risen by two thirds since the beginning of 2020.
Update: November 2 2021
This article has been updated with additional information.
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