Network International says it will fund the acquisition through proceeds from an equity placing representing 10.0% of the Company’s existing issued share capital, USD50 million vendor consideration shares issued to Apis Growth Fund I, managed by Apis Partners, USD13 million consideration shares issued to the DPO co-founders, with any small remaining balance to be funded via existing debt facilities.
According to Simon Haslam, Chief Executive Officer, Network International, :“We are excited by the proposed acquisition of DPO, the leading high-growth online commerce platform operating at scale across Africa. DPO will further consolidate our presence in Africa, strengthen our position across the entire payments value chain and accelerate our growth.”
Haslam says the acquisition will widen its capabilities across online, mobile, and alternative payments; bring an extensive and diverse range of direct merchant relationships to Network International; and provide a wider range of solutions for its existing customers.
DPO Group has through acquisitions become the largest online payments platform operating at scale across Africa with revenues of USD16 million in 2019 is present in 19 countries across Africa with South Africa, Kenya and Tanzania representing major markets. Though many analysts had expected an IPO, the acquisition is still a success, especially after the failed Jumia IPO at the NYSE.
DPO Group powers e-commerce and mobile money services for 47,000 merchants across high-quality brands by giving them multiple distribution channels with on the ground presence to recruit merchants, combined with direct connectivity to acquiring banks.
The acquisition consolidates and accelerates Network International’s presence in Africa and gives the firm an evenly balanced business in Africa across Merchant and Issuer Solutions. The deal also brings direct merchant and Mobile Network Operator (“MNO”) relationships, broadening Netwok International’s business in Africa across the entire payments value chain.
The deal also widens its capabilities and exposure in fast growing online payments and mobile money, enabling merchants to accept a wide range of payments methods.
DPO has seen strong current trading, following Covid-19 lockdown. Digital and online payments market in Africa expected to grow at 19% CAGR over the next five years and Covid-19 expected to accelerate this growthE-commerce penetration in Africa is 0.3% of private consumption, versus c.5% in the United Kingdom and c.17% in China.Following stringent lockdowns in DPO’s main market of South Africa during April:DPO signed c.4,400 merchants in June 2020, an all-time highTPV growth year-on-year was 27% in May (57% in constant FX) and 27% in June (49% in constant FX)
The deal will see DPO Co-Founders incentivised and aligned through rollover of USD13 million of their DPO ownership into Network International shares and a two year holding period after the acquisition. The transaction is expected to complete in Q4 2020.