Interswitch Confirms Unicorn Status After Investment From Visa

Interswitch Limited, a leading technology-driven company focused on the digitisation of payments in Nigeria has confirmed its unicorn status after Visa, the global payments firm, bought a significant minority stake in the former.

The term, unicorn in the venture capital industry refers to a tech startup company that reaches a $1 billion dollar market value as determined by private or public investment.

Although Interswitch did disclose the stake Visa bought. An earlier report by Innovation-village revealed that the global financial services group spent $200 million to acquire a 20% stake in the Nigerian based payments group

With this investment, Visa will join globally renowned investors, Helios Investment Partners, TA Associates and IFC, as shareholders in Interswitch, alongside Company management.  

Founded in 2002, Interswitch disrupted the traditional cash-based payments value chain in Nigeria by introducing electronic payments processing and switching services. Today, Interswitch is a leading player in Nigeria’s developing financial ecosystem with omnichannel capabilities across the payments value chain, processing over 500 million transactions per month in May 2019.

Interswitch’s core market, Nigeria, is the largest economy in Africa with a rapidly growing electronic payments market. Point of sale (“POS”) and ATM transactions per adult grew at a CAGR of 94 per cent and 59 per cent from 2013 to 2018, respectively. In Nigeria, there were only 11 card transactions per adult per annum in 2018 compared to 92 in markets like South Africa, 126 in Brazil and 465 in the UK. Despite this market under-penetration, POS card transactions in Nigeria are expected to grow at a CAGR of 63 per cent between 2018 and 2023.

The partnership will create an instant acceptance network across Africa to benefit consumers and merchants and facilitate greater connectivity for communities. Both parties will also retain their respective independent solutions, and Interswitch will retain its scheme neutral strategy.

Mitchell Elegbe, Founder and Chief Executive of Interswitch, said; “Sub-Saharan Africa is the fastest-growing payments market in the world, with growth driven by a young and dynamic population, rapidly evolving consumer behaviour, and an increasing desire for payment solutions that can be accepted across the continent and abroad. I am delighted that Interswitch has formed a partnership with Visa, with whom we plan to drive the next phase of transformation in the African payments landscape.”

Andrew Torre, Regional President CEMEA, Visa, said; “Africa is a priority region for us, and we continually seek strategic partnerships with local players to further strengthen our leadership position and enhance the payments ecosystem across the continent. This partnership aligns with our global strategy to work with and invest in innovative partners, and we look forward to working with Interswitch to provide new consumer and merchant experiences and support the rapid growth of digital commerce across Africa.”

Babatunde Soyoye, Helios’s co-founder and Managing Partner, added, “A strategic investment by Visa, the world’s leader in digital payments, into Interswitch is a substantial endorsement of the Company’s expertise in African payments. As an active investor in leading African payments businesses, we see tremendous opportunities to digitise payments across the continent and have worked closely with Interswitch’s management team to build high quality and scalable platform geared to address some of these opportunities. We look forward to furthering collaboration with the Company alongside Visa.” 

The transaction is subject to the relevant regulatory approvals and is expected to close by Q1 2020.

FT Partners acted as exclusive strategic and financial advisor to Interswitch on this transaction.