Nedbank’s billion Rand fintech deal given important green light

• Nedbank has received the go-ahead from the Competition Commission of South Africa to purchase fintech iKhokha for $90 million.
• It will likely be the second-largest fintech transaction that South Africa has ever seen.
• Nedbank now waits for a final go-ahead from the Competition Tribunal for the acquisition to conclude.

In what will be one of the country’s biggest fintech deals, Nedbank is preparing to acquire local fintech and payment processor iKhokha for $90 million, or R1.65 billion. The two companies have now received approval from the Competition Commission of South Africa in an important step to finalise the deal.

“The Commission has recommended that the Tribunal approves the proposed transaction whereby Nedbank intends to acquire iKhokha, without conditions,” said the commission in an announcement from late last week.

It is now up to the Competition Tribunal to approve the transaction, which will likely happen in the next few weeks, leading to the conclusion of the deal. Once completed, it will likely be the second largest fintech acquisition South Africa has ever seen. The first is the 2021 acquisition (h/t Tech Central) of Connect Group by Net1 UEPS Technologies, which was for approximately R3.7 billion.

“This acquisition is a natural evolution of our existing relationship with iKhokha and we are incredibly excited to welcome iKhokha to our Nedbank family,” said Ciko Thomas, Group Managing Executive for Personal and Private Banking, earlier this year.

“By combining their innovative technology with our deep banking experience, we will provide small business clients with the best-in-class tools they need to thrive.”

iKhokha provides card machines, digital payment solutions and business tools for local SMEs. It processes more than R20 billion annually, the company says, and has distributed more than R3 billion working capital into the SME sector.

The Competition Commission says that Nedbank is not owned by a single firm or shareholder as it is listed in the Johannesburg Stock Exchange (JSE) and its shares are widely held, while iKhokha “does not directly or indirectly control any firm.”

“The Commission is of the view that the proposed transaction is unlikely to substantially lessen or prevent competition in any market. The proposed transaction does not raise significant public interest concerns,” it explained.

“This is a proud moment for both the founders and the broader iKhokha leadership team,” said Matt Putman, CEO and co-founder of iKhokha in August.

“Joining forces with Nedbank gives us the platform to scale our impact, further accelerate product innovation, and unlock new value for our merchants. It also opens the door for us to explore expansion into other strategic markets on the continent. We remain committed to our mission of empowering entrepreneurs and building tools that help small businesses thrive.”