FairMoney, a digital bank based in Lagos and headquartered in Paris, is currently in talks to acquire
Umba, a credit-led digital bank providing payroll and financial services to customers in Nigeria and Kenya. The potential deal is valued at $20 million in all-stock transaction, according to sources familiar with the matter as reported by TechCrunch.
FairMoney’s interest in acquiring Umba indicates a strategy to grow its customer base by expanding into new markets, particularly in Kenya. However, the deal also highlights the challenges faced by African fintech companies in a difficult startup market globally.
Acquisition negotiations are in early stages, and information comes from anonymous sources due to the confidentiality of the details. FairMoney and Umba have not commented on the matter.
Umba, established in 2018 in San Francisco by Tiernan Kennedy and Barry O’Mahony, offers a range of banking services to customers in Nigeria and Kenya. The digital bank has raised approximately $20 million in funding and counts investors such as Costanoa Ventures, Monzo co-founder Tom Blomfield, and several others.
FairMoney, backed by investors like Tiger Global and DST, has raised over $57 million and has expanded from its lending services in Nigeria to other products and markets. The company has made previous acquisitions, including PayForce, a merchant payment service provider in Nigeria.
Both FairMoney and Umba have been expanding their product offerings and seeking growth opportunities in new markets, with FairMoney venturing into India as its second market and Umba diversifying its banking products in Nigeria and Kenya.
The potential acquisition of Umba by FairMoney may not only rely on user numbers or product offerings, but also on Umba’s microfinance license in Kenya, which provides a strategic advantage for FairMoney’s expansion plans.
Sources suggest that while Umba was not actively seeking a sale, FairMoney’s offer might be appealing given its current financial status. The fintech has shown revenue generation and expense management challenges, leading to considerations for further funding or an acquisition.
The tightening of VC funding in Africa has led to more M&A discussions in the fintech industry, with companies like FairMoney and Umba considering strategic acquisitions to navigate challenges and capitalize on growth opportunities.
The potential acquisition reflects an evolving landscape in African fintech, with companies like FairMoney looking to strengthen their market position through strategic acquisitions and partnerships.
