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FairMoney , a digital bank ground in Lagos and headquartered in Paris , is in discussions to acquireUmba , a credit rating - direct digital camber providing paysheet and fiscal overhaul to customers in Nigeria and Kenya , in a $ 20 million all - stock peck , root tell TechCrunch .
The move signals FairMoney ’s pursuit in growing its client base by expanding into more countries , specifically Kenya . But it also underscores the challenges face fintechs in Africa amid a challenging market place for startup globally : a $ 20 million all - share hatful would be around equivalent to the amount Umba call forth from outdoor investors .
skill negotiation are still in their early stage , harmonize to the sources , who requested anonymity due to the secret nature of the details . FairMoney and Umba did not respond to request for comment ahead of publication .
Umba , founded by Tiernan Kennedy and Barry O’Mahony in San Francisco in 2018 , was launch as a course credit - led digital savings bank place egress market . It provides banking services such as loan , current account , savings invoice , posit deposit accounts and bank note payment to customers in Nigeria and Kenya .
To date , the digital bank has insure around $ 20 million in backing , per PitchBookdata . Its investor include Costanoa Ventures , Monzo co - laminitis Tom Blomfield , Lachy Groom , ACT Ventures , Lux Capital , Palm Drive Capital , Banana Capital and Streamlined Ventures .
Meanwhile , FairMoney has beenbackedby the likes of Tiger Global , DST Global Partners , Speedinvest and others and has raised just over $ 57 million , consort toPitchBook . It was last valued at between $ 400 million and $ 500 million following a nosepiece round last class .
FairMoney , best known for its loaning services in Nigeria , has been looking for more avenues for elaboration . In 2020 , FairMoney determinedly enteredIndia as its second market , but beyond amomentum update in 2021 , it has not made any more recent disclosures about how that business concern is doing .
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FairMoney has also been extend its production . The startup ’s eponymous app originally set up as a digital lender in Nigeria six years ago . Since then , it has added other financial service , such as debit cards , transfers and payments . It says that it has over six million retail customers .
FairMoney ’s previous acquisitions have includedPayForce , a Italian sandwich - brand of YC - backed Nigerien merchandiser requital service CrowdForce , which it pick up in a John Cash - and - stock deal deserving $ 15 - 20 million .
“ We see ourselves as a retail bank , but the line between merchants and retail is often blurry , ” FairMoney CEO Laurin Hainy tell TechCrunch in an interview last yr around the PayForce acquisition . “ We ’ve thought about the merchant space more and more , and we see a lot of potential synergies between what PayForce and we have ramp up severally . ”
Nigerien credit - led fintech FairMoney acquires PayForce in retail - merchandiser banking free rein
Umba also bulge out as a retail - focused digital banking concern in Nigeria before diversifying its offering to let in merchandiser funding and line banking products in the West African country as well as Kenya . Google Play point over 1 million installs of its app , but the phone number of register and active drug user is not expose .
FairMoney ’s potential accomplishment of Umba may not solely hinge on exploiter numbers or product offerings . For one , Umba launched merchant and business - face products within the last four months , so it ’s improbable to have earn significant traction and mass in that clip physique . FairMoney could probably be more interested in Umba ’s microfinance license , obtain in 2022 through acquiring amajority shareholding in Daraja Microfinance Bank . This permit allows Umba to offer banking services in Kenya .
prevail a microfinance bank license in Kenya can be dispute . Unlike Nigeria , which has over 600 microfinance depository financial institution licenses , Kenya has only 14 such licenses . For the Tiger - plunk for FairMoney , acquiring Umba could streamline entry into Kenya , go around the lengthy licensing process that adopt Umba three years . As such , an acquisition could see FairMoney leverage Umba ’s live infrastructure or combine both fintech capabilities to set in motion its divine service in Kenya .
Sources tell us while Umba was n’t actively seeking a sale , it may rule FairMoney ’s offer enticing , particularly given its current fiscal condition . Between January and June 2023 , the fintech yield $ 335,000 in taxation while incurring $ 1.54 million in expenses , as delineate in an investor pitch deck of cards obtained by TechCrunch .
Additionally , after secure a$15 million Series A financial backing roundat a $ 60 million valuation in February 2022 , Umba search further funding last December . Ultimately , it raise a $ 1.55 million bridge deck unit of ammunition at a rating of just $ 25 million which is in bank line with FairMoney ’s offer . The fintech may be regard other options , the source say .
Amid the fintech boom , digital banks and contender bank in Africa attracted tens of gazillion of dollars in speculation capital investments , spur legion participant ’ egression with programme to gainsay traditional incumbents .
Now the story is dissimilar . VC funding continues to stiffen , and many of the big bets are not playing out as prognosis , with society overleap maturation target and facing intriguing social unit economics . That has lead to more M&A conversation . Just this month , Nigerian neobankCarbon acquired Vella Finance , an SME - focalize banking service provider . And FairMoney ’s potential acquisition of Umba , if successful , would mark its 2d deal in two years .
Despite glimmer of profit , most African neobanks remain in the red
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