MFS Africa collects $100M to expand its digital payments gateway across the region – TechCrunch
Investor curiosity in African fintech continues to seize headlines with giant fundraises. At this time, Africa’s largest digital funds community MFS Africa joins the fray.
The corporate confirmed to TechCrunch that it has raised $100 million in Sequence C financing — break up between $70 million fairness and $30 million debt.
Personal fairness fund AfricInvest FIVE co-led the Sequence C spherical with current buyers Goodwell Investments and LUN Companions Group.
New buyers CommerzVentures, Allan Grey Ventures, Endeavor Catalyst and Endeavor Harvest additionally joined the spherical, whereas ShoreCap III returned as an current investor with different funds.
The announcement is the icing on the cake for the corporate, which has made a number of important acquisitions and investments within the final couple of years hardly ever matched by any fintech on the continent.
In a name with TechCrunch, founder and CEO Dare Okoudjou was fast to focus on MFS Africa’s mission on the continent: to make it straightforward for Africans to ship and obtain cash simply as they do with calls.
For somebody who spent greater than a decade within the telecoms as an engineer and govt, Okoudjou has been round lengthy sufficient to understand how tough it was to make a cellphone name in Africa.
And although calls are nonetheless costly in Africa when in comparison with the remainder of the world, the method of creating them has turn into fairly easy because of cell phone penetration and development in telecommunications. With MFS Africa, Okoudjou envisions the identical for funds on the continent.
“The way in which we take without any consideration the truth that we will talk with anyone world wide by way of a cell phone, my dream is that it ought to be the identical with a cell pockets,” CEO Okoudjou informed TechCrunch throughout an interview.
“For those who signal to any cell pockets someplace on the earth, beginning with Africa, it ought to be sufficient to transact with anyone else on the earth. That’s the grand mission of the corporate.”
He began the corporate in 2009, facilitating peer-to-peer transactions from Kenya to Zambia, Uganda, Zimbabwe and the Ivory Coast, and vice versa.
However as the corporate continued to develop, it turned obvious that the product had use instances for small companies. In reality, on the time, greater than half of its customers in East Africa reported utilizing the platform for enterprise causes, in response to Okoudjou.
Thus, by merging fragmented and disparate cost schemes throughout the continent into one seamless community the identical telecom networks function, MFS Africa turned the go-to platform for people and companies to transact throughout borders and currencies.
MFS has made a collection of acquisitions and investments this previous yr
The London-based firm connects greater than 320 million cell cash wallets throughout 35+ African nations and 700 corridors. It additionally covers a broad vary of monetary providers round financial institution accounts, pay as you go playing cards and digital debit playing cards.
Nevertheless, a presence in Africa’s largest market, Nigeria, remained elusive for the corporate. That modified final month when it acquired Baxi, an agent banking platform developed by Capricorn Digital.
Nigeria is kind of completely different from the everyday MFS market, the place cell cash brokers run the present. Within the West African nation, agent banking networks are extra distinguished.
However as a result of they provide an analogous vary of providers in digitizing money like cell cash brokers in East Africa, it made sense for MFS to accumulate Capricorn and have entry to its greater than 90,000 brokers.
Not solely does the acquisition give MFS Africa an entry into the Nigerian market, however it additionally opens the corporate to a classy agent community unseen in different African markets, mentioned Okoudjou.
Cellular cash brokers are primarily useful in offering prospects with money deposits and withdrawals whereas agent community platforms like Capricorn, by way of its Baxi containers, present underbanked and unbanked Nigerians with entry to transfers, withdrawals, airtime purchases, utility invoice funds, pay-TV and information subscriptions.
“Agent networks are essentially the most digitalized section of SMEs already on the continent as a result of fairly often they produce other companies promoting different issues. They are plugged into the economic system and the material of society,” he mentioned.
“So for those who’re enthusiastic about bringing digital cost and digital at giant to SMEs in Africa, it is a fairly good place to start out. And we imagine once more that what’s occurring in Nigeria could find yourself being the blueprint for the remainder of the continent.”
MFS Help Workforce
When the Baxi acquisition is accomplished, pending approval from the Central Financial institution of Nigeria, Okoudjou says a buyer can stroll to a Baxi agent and make cross-border funds to Benin, Cameroon or China, and vice versa.
Facilitating funds from Africa to China falls outdoors the purview of MFS Africa’s holistic pan-African funds method. Nevertheless, it’s a possibility too good to disregard: China-Africa bilateral commerce is among the fastest-growing corridors globally, with a worth topping $192 billion in 2019.
Okoudjou says the corporate started contemplating the hall when it kickstarted the acquisition of Beyonic, a Ugandan digital funds supplier for small and medium-sized companies. The Johannesburg-based firm had surveyed these companies to grasp their wants higher and discovered essentially the most urgent difficulty they confronted, asides from accessing loans, was sending and receiving funds to and from China.
MFS Africa is at present engaged on setting interoperability between cost networks within the Asian nation and Africa, ranging from Nigeria earlier than spreading to different markets. The timeline for rollout may be subsequent yr, in response to some sources.
Final yr, MFS Africa fully acquired Beyonic; with Baxi, the corporate has made two consecutive acquisitions within the area of a yr and a few months. And paired with minority stakes in smaller fintechs comparable to Julaya, Maviance and Numida; medical health insurance product Inclusivity and agritech platform Akorion, MFS Africa has achieved an honest job utilizing funding and acquisitions — strategies Okoudjou phrases “inorganic development” — to exert its affect throughout the continent.
In 2018, MFS Africa raised its Sequence B and closed at $23 million after some extensions. With this Sequence C spherical, its whole fairness increase is over $95 million whereas debt stands at $30 million (the corporate is elevating debt for the primary time). Rising markets lender Lendable and Norsad offered the debt financing.
Debt presents a possibility for a lot of founders and startups to have cheaper funding as a result of they don’t have to offer out fairness. In MFS Africa’s case, it raised debt financing to finance the floats wanted for real-time settlements.
“If somebody is sending cash from Kenya to Uganda in lower than a minute, somebody must be out of pocket. We handle that throughout all these nations throughout all these companions, and also you want a bit of little bit of oil to grease the system,” mentioned the CEO.
“We realized we don’t want to lift fairness since there’s a debt marketplace for that. In order that’s one of many causes we checked out debt and we imagine once more, because the ecosystem matures, extra firms may even do a mixture of debt and fairness.”
MFS Africa intends to make use of the brand new funding in a number of methods. First, it needs to double down on its growth efforts and add extra regional places of work throughout the continent and within the U.S. and China. It just lately opened new places of work in Abidjan, Kampala, Kinshasa, Nairobi and Lagos whereas shifting its headquarters from Mauritius to London.
The 12-year-old firm has additionally earmarked some funding to strengthen its Governance, Dangers and Compliance (GRC) features and treasury and liquidity pool. It additionally plans to rent extra expertise inside and outdoors the continent and proceed investing in different African tech startups.
In a press release, Julius Tichelaar, a accomplice at AfricInvest FIVE, mentioned his agency led the spherical as a result of MFS Africa’s broad vary of monetary and funds providers resonates with AfricInvest FIVE’s monetary inclusion technique.
“Cross border funds stay an vital problem in lots of African markets as we speak and MFS Africa is uniquely positioned to confront this. We are excited to hitch MFS Africa’s world-class administration staff on its mission and to help its development journey,” he concluded.
