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Flutterwave Is In The Race To Acquire Prominent UK-based Fintech Railsr

By  |  January 10, 2023

African fintech company, Flutterwave, is vying with a number of interested parties in talks to acquire prominent British fintech company, Railsr, some of whose existing shareholders are also part of a consortium interested in buying the company.

UK-based Railsr, the London-headquartered embedded finance startup that rebranded from Railsbank early last year, has been reported to be under pressure in a tough funding environment and it laid off a reported 16 percent of its staff last November despite closing a USD 46 M Series C a month earlier at a significantly reduced valuation, per reports. All in all, Railsr has raised over USD 100 M in equity funding from investors that include Visa.

A sale that would occur at a significant discount to an earlier investment round is being discussed by the British fintech, per Sky News, with competitors among the suitors, as well as existing investors, and Africa’s largest payments technology company. Flutterwave, which became Africa’s highest-valued startup at USD 3 B on the back of last February’s USD 250 M Series D. There is thus keen competition for Railsr which has built a valuable operation across banking services, credit cards and digital wallets.

The rival offers for Railsr come as the fintech sector braces for an anticipated wave of consolidation as companies struggle to access sufficient funding to survive. Railsr itself closed a bridge round last year believed to be geared towards helping the business tide over until the completion of a sale. The timing and outcome of the ongoing sale process remain unclear, however.

Flutterwave’s emergence as one of the entities vying to acquire Railsr appears to be in line with the company’s strategy of “growing inorganically through acquisitions” to consolidate its position in the fintech space as declared by its Co-Founder/CEO, Olugbenga “GB” Agboola, at the point of announcing last year’s big raise. If the bid for Railsr is successful, it would mark Flutterwave’s second publicly disclosed acquisition after the company paid an undisclosed six-figure amount to acquire the creator platform, Disha, in 2021.

A deal of such profile as the latest — while not entirely a novelty as African startups have been found to possess something of a latent appetite for acquiring complementary businesses in other parts of the globe (with MFS Africa’s acquisition of GTP for a reported USD 34 M the most recent high-profile example) — has the makings of a boost for Flutterwave which also has its eyes on going public in the near future, likely via the Nasdaq.

A string of scandals and controveries pointing accusing fingers at Flutterwave’s leadership for misconduct, as well as some trouble with the authorities in Kenya over alleged ties to money laundering, put Flutterwave under the spotlight for the wrong reasons for long periods last year. But the startup appears to be underailed in its big-picture pursuits and has denied any wrongdoing.

Flutterwave and Railsr have neither denied nor confirmed the links at the moment, but it is likely that there will soon be new ownership at the company that has in the past been touted to be “transforming the finance industry in the same way that Apple did to the music industry when they created iTunes.”

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