A consortium that includes Patrice Motsepe’s African Rainbow Capital (ARC), as well as the private equity manager Ethos, will invest R1.5 billion in Crossfin Technology as part of a “landmark deal” said to be the largest in the country’s fintech sector.
Established in 2017, Cape Town-based Crossfin offers payments technologies. The company and its subsidiaries processes more than 134 million card and 20 million mobile-enabled payment transactions per year, with a value of R79 billion. Crossfin owns Adumo, South Africa’s largest independent payment processor.
Adumo provides payment solutions to more than 50 000 merchants and is a partner of Tyme Bank, which is owned by ARC.
ARC will acquire 37.33% of Crossfin, via the consortium, for R600 million. Ethos will invest in Crossfin via its Ethos’ Mid-Market Fund.
The investors said in a statement the transaction is one of the largest private equity-led investments in the fintech sector in South Africa to date and offers the consortium exposure to an industry that is expected to continue benefiting from the secular trends of digitalisation and proliferation of payments technologies.
“The differentiated business model of Crossfin has allowed the platform to consistently achieve robust top line and earnings growth … despite very limited access to capital to support growth,” they said.
The transaction will see the exit of the founding investors Capital Eye Investments and the Multiply Group, who have been anchor shareholders since 2017.
“With additional growth capital invested in the business, we are advancing our vision of building and investing in great fintech businesses growing a compelling and mutually beneficial fintech ecosystem to enable growth and efficiencies for economies in Africa and beyond,” said Crossfin CEO Dean Sparrow.