FirstRand has made a big show of support for the growth and investment case of Optasia, taking a one-fifth stake in the fintech group, which is preparing to list on the JSE in the coming weeks.
The banker is looking to bolster its exposure to new business models and technologies such as AI in the world of lending. This in turn opens it up to new markets and a broader base of customers.
For Optasia backing from one of the continent’s largest financial services groups is a big vote of confidence.
On Monday, the owner of FNB, RMB and Ashburton said it had agreed to acquire 20.1% of Optasia for an undisclosed sum. This deal is happening at the same time Optasia is gearing up for its JSE floatation.
Last week, the Dubai-founded group announced the offer price range for the initial public offering at R15.50-R19 per share. Up to 419.8-million shares will be made available, representing 30.4% of its issued share capital.
This would indicate a capital raise of R6.5bn-R7.98bn if all the shares were to be taken up. However, the final pricing will be determined after the bookbuild, based on demand within the range.
FirstRand is acquiring shares from a group of existing private equity investors in Optasia, including King Supreme, Waha VAS, Zoey Enterprises, BH Holdings, ADP III, Chronos and Muller Capital.
Targeting the underbanked through AI
FirstRand believes that this investment in Optasia represents an exciting opportunity to “leverage a proven fintech platform that has a successful track record of solving the lending needs of underbanked or unbanked consumers, practitioners and micro enterprises that have had difficulty accessing traditional credit products”.
Optasia describes itself as “an AI-enabled fintech platform that provides microfinancing solutions and airtime credit solutions”. In essence the company is in the business of microlending across various platforms.
We are excited to acquire this interest in Optasia which represents a key step in executing our growth strategy to leverage technology platforms to enhance credit capabilities and expand financial access across the continent.
— Mary Vilakazi, FirstRand CEO
Founded in December 2012, it has developed a network of distribution partners, including mobile network operators and financial institutions. It has access to more than 860-million mobile subscribers.
By end-June, Optasia operated through a network of 49 distribution partners and 13 financial institutions.
The group is behind the airtime lending businesses of mobile operators Vodacom and MTN. It also lists India’s Airtel, Pakistan’s Jazz and Indonesia’s Indosat Ooredoo Hutchison as mobile networks that are part of its partner network.
In addition, the group partners with 13 financial institutions.
Expanding reach across 38 countries
FirstRand said Optasia’s ability to pre-score customers, process micro loans at scale and use mobile data sales as a credit collection mechanism is “highly innovative and is clearly meeting the needs of millions of customers” in 38 countries across Africa, the Middle East and Asia.
“Ultimately Optasia offers FirstRand access to these new markets and new customers, which would be challenging to acquire organically and provides the group with geographic expansion opportunities in key emerging markets.”
The group sees its FNB division as a good candidate to leverage Optasia’s AI capability while pushing into segments that it has a weaker position in and help with its efforts in emerging market countries.
Mary Vilakazi, CEO of FirstRand, said: “We are excited to acquire this interest in Optasia which represents a key step in executing our growth strategy to leverage technology platforms to enhance credit capabilities and expand financial access across the continent.”
Optasia CEO Salvador Anglada said the investment “reflects strong confidence in Optasia’s model and in the impact we are creating.”
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