Emma Okonji with agency report
Visa is set to acquire a 20 per cent stake in Interswitch, Nigeria’s payment channels gateway, with the payment of $200 million. Visa valued Interswitch at $1 billion.
Helios bought 52 percent of Interswitch for $96 million in December 2010.
Zenith Bank still owns a 5 per cent stake in Interswitch and is currently valued at N538.4 billion, according to report from Skynews.
The report said Visa and Interswitch were in advanced talk on the transaction that could be announced this week.
A source from Interswitch said it would be too early to comment on the deal. The source, however, did not deny the deal.
Interswitch reportedly generated an annual revenue of N30 billion. It reported a profit after tax of N5.3 billion in 2018 and has an impressive EBITDA margin of 43 per cent.
According to the report, the move by Visa to acquire a 20 per cent stake was targeted at becoming a cornerstone investor in Interswitch ahead of the company’s prospective initial public offering (IPO) in London next year.
It was reported by Nairametrics that Interswitch has revived its plans for an initial public offering, via a dual listing on the Nigerian Stock Exchange and London Stock Exchange.
Interswitch, according to the report, has hired two financial advisers, the JPMorgan Chase & Co, and the Standard Bank Group to prepare it on the potential initial public offering.
Firms desiring to be listed on the stock market typically hire financial advisers that would help them with valuation, marketing of the offer, compliance with listing rules, and other regulatory filings.
Visa also wanted to make a strong statement against its closest rival, MasterCard, with its move to acquire a 20 per cent stake in Interswitch.
Earlier in the year, MasterCard had invested $300 million in Dubai-based Network International ahead of its stock market debut in London. Network International, is the largest payment processor in Africa and the Middle East.
The rush to build stakes in African businesses by Visa and MasterCard is being driven by a desire to take advantage of established platforms in markets that are both fast-growing and under-penetrated.
Interswitch is considered Nigeria’s first unicorn in the Fintech space and has dominated Nigeria’s payment channels gateway for over a decade.
It is also one of the largest Africa-focused electronic payments and infrastructure companies, with point-of-sale terminals, online consumer payment platforms and its own card, Verve.
Financial Analysts saw Interswitch’s move to cede a 20 percent stake to Visa as a huge competitive move to increase its market penetration.