FairMoney, a Nigerian digital bank and headquartered in Paris, is set to acquire Umba, a credit-led digital bank providing payroll and financial services to customers in Nigeria and Kenya.
The $20 million all-stock deal indicates FairMoney’s interest in growing its customer base by expanding into more countries, specifically Kenya.
According to Techcrunch, acquisition negotiations are still in their early stages. FairMoney and Umba did not respond to requests for comment.
Founded by Tiernan Kennedy and Barry O’Mahony in San Francisco in 2018, Umba started as a credit-led digital bank targeting emerging markets. It provides banking services such as loans, current accounts, savings accounts, fixed deposit accounts and bill payments to customers in Nigeria and Kenya.
Since its launch, Umba has secured around $20 million in funding, per PitchBook data. Its investors include Costanoa Ventures, Monzo co-founder Tom Blomfield, Lachy Groom, ACT Ventures, Lux Capital, Palm Drive Capital, Banana Capital and Streamlined Ventures.
While FairMoney FairMoney has been backed by the likes of Tiger Global, DST, Speedinvest and others and has raised just over $57 million, according to PitchBook. It was last valued at between $400 million and $500 million following a bridge round last year.
The deal is part of FairMoney”s expansion plan. In 2020, FairMoney entered India as its second market. The company has also been expanding its product. It’s eponymous app originally launched as a digital lender in Nigeria six years ago and has added other financial services, such as debit cards, transfers and payments.
Although FairMoney’s potential acquisition of Umba may not solely hinge on user numbers or product offerings. FairMoney could likely be more interested in Umba’s microfinance license, obtained in 2022 through acquiring a majority shareholding in Daraja Microfinance Bank. This license allows Umba to offer banking services in Kenya.
Besides, Umba, while not actively seeking a sale, might consider FairMoney’s offer enticing, given its financial standing .It also underscores the challenges facing fintechs in Africa amid a challenging market for startups globally: a $20 million all-share deal would be roughly equivalent to the amount Umba raised from outside investors.