Moniepoint, the fast-rising business banking startup in Nigeria that led a recently announced investment round in 20-month-old Rwanda-born neobank Payday, is set to acquire Payday outright in the coming months, people familiar with the matter said.
In a deal that was apparently negotiated in the midst of closing the oversubscribed USD 3 M seed announced Wednesday, which saw participation from new and existing local and global investors (individual and institutional), Moniepoint and Payday have agreed on broad terms to complete the transaction and make it official by the end of Q2 2023, a communication that went out to investors and advisors disclosed.
Payday has raised over USD 5 M since its founding, with Ingressive Capital Fund II, Techstars, HoaQ, etc. among backers who are in line for an exit; a development that boosts Africa’s tech landscape at a time when funding has slowed and talk of returns has surfaced. The acquisition of Payday by Moniepoint also seems a good sign for increased local capital participation in African tech as efforts have stepped up in recent years.
Favour Ori, Payday Founder/CEO, who TechCrunch quoted as saying Payday had earlier turned down a USD 15 M acquisition offer from an African unicorn, declined to comment. It’s unclear whether Moniepoint (formerly TeamApt), whose CEO Tosin Eniolorunda did not respond to requests for comment, had made the earlier offer.
While finer details are still being ironed out, Moniepoint is snapping up Payday in a cash-plus-equity deal priced under USD 40 M, well-placed sources revealed to WT, asking not to be identified because the discussions are private.
As part of the terms, some Moniepoint stock will be offered to members of the Payday team who are to carry on with building its multi-currency borderless payment products under the new ownership, a source shared.
Ori, who had previously led the now-defunct tech talent outsourcing startup, WeJapa, and reportedly saw an edtech platform he developed get acquired in February 2020, has steered Payday from purely a remittance path to a neobank issuing global accounts and virtual cards denominated in the world’s major currencies, facilitating international payments for Africans.
This fintech vertical has proved attractive over the past year as upstarts and more established players scramble for a rising crop of locals keen to participate in the global economy but often hamstrung by stifling foreign exchange controls amid deteriorating economic conditions at home. Several African fintechs offer tailored solutions in this regard, typically earning revenue from FX arbitrage or fees charged for enabling customers to make international payments.
Payday has become one of the fastest-growing African startups on the back of addressing those global payments needs, tripling its customers to 300,000 in the last three months, processing USD 25 M monthly, and possibly hitting monthly revenue of between USD 750 K to USD 1.25 M, as one industry person estimates.
A marketing splash, coupled with the novelty of becoming a payment partner for SpaceX enabling users in Nigeria and Rwanda to purchase Starlink routers with Payday, has also boosted the business which has been profitable since August 2022, as TechCrunch reported.
On its part, Moniepoint has evolved since launching in 2015 to become one of the more notable digital banking solutions for small and medium businesses. It claims to process the majority of the POS transactions in Nigeria currently, boasting an annualised processed value of more than USD 170 B and a customer base of over 600,000 businesses which enabled it to more than double its annual revenues in 2022 across its suite of payment, banking, credit and business management products.
Considered a unicorn-in-waiting in some quarters, Moniepoint was reported in November 2021 to be targeting a valuation of USD 1 B amid talks to raise USD 150 M. It would, however, land a fraction of that nine months later in a round led by QED which made its debut investment in Africa. CEO Eniolorunda reiterated at the time that they were not overly eager to raise in the difficult funding environment as the company is profitable but they embraced the opportunity to “add a new high-profile investor.”
Moniepoint appears to have become a stronger proposition since then and by acquiring Payday, it looks to advance its goal of further unlocking financial ease by addressing key international payment pain points with merchants and individuals. Also, the prospect of leveraging Payday’s infrastructure to further deepen its suite of financial services for its growing clientele comprising businesses is a strategic alignment Moniepoint’s CEO, Eniolorunda, has alluded to.
AUTHOR’s NOTE: While this news appears to have sparked some dispute on social media as the parties involved have attempted to either deny or refrain from commenting publicly at this time, I would like to make it clear that I also confirmed with my own eyes that an actual communication went out to investors on the weekend of March 24 stating without equivocation that Moniepoint is acquiring Payday; broad terms listed; deal to be formalised in 3 months, etc.
Whether this ultimately happens as specified or not is obviously beyond my control, hence, one can only be so certain.
