The growing interest in the FinTech sector is driven by Africa’s low penetration rates for traditional banking services at 25 percent and high mobile penetration at 44 percent.
According to Cytonn Investments, investors will continue to show interest in the FinTech sector in Sub-Saharan Africa as more businesses seek to enhance efficiency and reduce costs by incorporating technology in their operations.
Furthermore, the significant difference in credit extension activity in Africa compared to other regions gives FinTech lending firms a perfect opportunity to provide credit via convenient and already established channels.
Here are some of the notable deals that made headlines in Kenya in H’1 2019:
The first notable FinTech deal made was when Private Equity firms AfricInvest, based in Tunisia, and Catalyst Principal Partners, based in Kenya, acquired a minority stake in Prime Bank Kenya.
The stake acquired was 24.2 percent of Prime Bank Kenya, through a capital injection of 5.1 billion shillings, with the capital targeted to carry out strategic plans including expanding locally and into the region.
This was the first bank acquisition in 2019, and in line with Cytonn’s expectation of consolidation in the Kenya banking sector following the enactment of the Banking (Amendment) Act, 2015 and the fact that Kenya is overbanked, as highlighted in our Q3’2018 Banking Sector Report.
The second FinTech deal made was when AfricInvest also announced a further investment of 273.0 million shillings in insurance group Britam.
From the investment, AfricInvest acquired an extra 32.5 million shillings shares at 8.4 shillings per share, a stake of 3.3 percent.
The third FinTech deal was between Sanlam Group, a South African financial services firm and Sanlam Investments East Africa (SIEA), an asset management firm based in Kenya.
Sanlam Group sold an undisclosed amount of its stake in SIEA for ZAR 101.0 million (730 million shillings) to an undisclosed party.
SIEA currently manages an asset portfolio of over 200 billion shillings, with a Money Market Fund size of 1.7 billion shillings as at 31st December 2018, ranking it as the 5th largest asset manager in Kenya in terms of assets under management for Money Market Funds.
Lastly, Mauritius based Bank One, in which Kenyan banking group I&M Holdings has a 50 percent stake, is set to receive a USD 37.5 million (3.8 billion shillings) loan from the International Finance Corporation (IFC), with an undisclosed tenor.
The loan will be classified as senior debt, therefore ranking higher than other Bank One’s obligations.