Visa has announced it will acquire a “significant minority” stake in Nigerian payments platform Interswitch.
Interswitch did not provide financial details in its statement but media reports indicate that Visa would buy a 20% stake for $200 million. That would value Interswitch at $1 billion, giving it “unicorn” status – a term for tech companies with a valuation of a billion dollars or more.
Visa will join Helios Investment Partners, TA Associates and IFC as the primary shareholders in Interswitch. Andrew Toree, Visa’s regional president for Europe, the Middle East and Africa said that Africa — the world’s second-fastest growing banking market according to a 2017 McKinsey report — is a “priority region” for the company.
Interswitch has long been expected to launch an initial public offering (IPO) to allow the original investors to offload part of their stakes in the company. Founded in 2002 by Nigerian entrepreneur Mitchell Elegbe, Interswitch also owns Verve – the largest domestic debit card scheme in Africa – and Quickteller, a consumer payments platform that enables money transfers, bill payments and mobile and internet air time purchases. Quickteller processed over 42 million transactions monthly as of 31 July – the equivalent of more than 560 billion naira ($1.82 billion).
Rating agency Moody’s says that Interswitch processes some 90% of total electronic transactions in Nigeria – a market where electronic payments increased by 32% in 2018 and are expected to keep growing. Interswitch posted an average net revenue growth of 17% from 2017-2019 and an average EBITDA margin of 40% over the same period.