Nedbank Purchases iKhokha for $90 Million to Bolster SME Digital Services and Financial Access in South Africa
Nedbank Acquires Fintech Startup iKhokha for $90 Million
In a move to bolster its support for Small and Medium Enterprises (SMEs) in South Africa and potentially across Africa, Nedbank Group has agreed to a $90 million (approximately R1.65 billion) all-cash acquisition of fintech startup iKhokha. The deal is subject to regulatory approvals and is expected to finalize in the upcoming months.
Based in Durban, iKhokha offers digital payment solutions and business management tools to South African SMEs. The fintech startup processes over R20 billion in digital payments annually and has provided more than R3 billion in working capital to the SME sector.
The strategic rationale behind this acquisition is to accelerate and deepen Nedbank's support for the SME sector through digital innovation and inclusive financial services. By combining its extensive banking experience with iKhokha's innovative fintech solutions, Nedbank aims to empower small businesses with best-in-class technology that drives growth, access to capital, and improved financial inclusion.
iKhokha's CEO and co-founder, Matt Putman, believes the acquisition will allow the company to scale its impact, accelerate product innovation, and unlock new value for merchants. The acquisition aligns closely with Nedbank’s vision for digital transformation in the SME sector by integrating iKhokha’s digital payment processing capabilities and credit scoring tools to serve underserved SMEs more effectively.
The acquisition marks a successful exit for iKhokha's long-time investors, including Apis Partners, Crossfin Holdings, and the International Finance Corporation (IFC). Apis Partners' Matteo Stefanel and Udayan Goyal are proud of iKhokha's growth from a fintech startup to a leading payment provider in South Africa. Dean Sparrow, CEO of Crossfin Holdings, expressed pride in iKhokha's journey.
Under the acquisition terms, iKhokha will continue to operate as a wholly-owned subsidiary of Nedbank. The fintech will retain its brand and leadership team, and iKhokha plans to expand into other African markets, aligning with Nedbank's regional growth ambitions.
Ciko Thomas, Nedbank's Group Managing Executive for Personal and Private Banking, considers the acquisition a "pivotal moment" in the bank's SME-focused strategy. Nedbank Group has focused on enhancing its digital offerings in a competitive banking environment and plans to allocate R1.8 billion to R2.5 billion annually to emerging technologies.
Nedbank Group CEO Jason Quinn emphasized the broader significance of the acquisition, stating that empowering entrepreneurs is critical to building a thriving, inclusive economy. By merging iKhokha's technology with Nedbank's banking experience, small business clients will receive industry-leading tools to help them succeed.
In summary, the acquisition strengthens Nedbank’s SME fintech leadership and market presence, enables a combined ecosystem of digital payments, credit, and analytics unique among South African banks, targets a growing $65 billion African fintech market with a focus on SMEs that contribute significantly to employment and GDP, and supports Nedbank’s goal of financial inclusion and an inclusive, thriving entrepreneurial economy.
- The strategic acquisition of iKhokha by Nedbank aims to drive growth and financial inclusion for small businesses through investing in venture capital and integrating technology with traditional finance services.
- The combination of Nedbank's banking experience and iKhokha's innovative fintech solutions opens up opportunities for small businesses to access capital, improve their financial management, and potentially scale their operations across Africa.
- This acquisition is part of Nedbank's larger initiative to transform the SME sector, allocate significant resources to emerging technologies, and ultimately foster an inclusive, thriving economy by increasing financial inclusion and entrepreneurial success.
