Stanbic IBTC Holdings Plc, the Nigerian subsidiary of Standard Bank Group, has announced plans to recapitalize its fintech arm, Zest Payments Limited, with an investment of ₦4 billion (approximately $2,480,040). This funding is part of a larger capital raising exercise aimed at securing ₦148.71 billion, with the allocation to Zest representing about 3% of the total amount being raised.
During a recent investor presentation related to the bank’s rights issue, Kunle Adedeji, Acting CEO and Group CFO of Stanbic IBTC, detailed the financial strategy, stating, “Approximately 3.6% of the ₦148.71 billion, which amounts to five billion naira, will be utilized to recapitalize two subsidiaries. Zest Payments will receive around four billion naira, while one billion naira will be allocated to our venture business.”
This recapitalization comes as a significant boost for Zest Payments, which has been struggling to keep pace with competitors such as GTCO’s fintech subsidiary, HabariPay, and Access Holdings’ fintech, Hydrogen. Launched in May 2023, Zest has yet to achieve profitability, with its financial performance lagging behind that of Hydrogen, which managed to turn a profit in its second year of operation. In 2023, Zest Payments Limited, previously known as Stanbic IBTC Financial Services, reported a loss of ₦1.2 billion, with total income for the year amounting to only ₦68 million.
CEO Stanley Jacob addressed the challenges faced by Zest, noting that competitors like Hydrogen and HabariPay are approximately 18 months ahead in their development. He emphasized that Zest’s operational timeline effectively began on October 4, 2023, marking its real year of operation.
Jacob further clarified Zest’s strategic focus, stating, “Zest is not a switch, like other fintechs. Our strategy is centered around payments and e-commerce, leveraging the support of our banking group to cater to numerous businesses. Essentially, our fintech is primarily designed to serve them.”
Zest Payments’ core offering revolves around electronic commerce, aimed at assisting businesses in establishing online sales channels. The platform provides customizable product listings and integrates various payment solutions, including QR codes, USSD, card payments, and bank transfers. Additionally, Zest holds a Value Added Service (VAS) aggregator license, enabling it to facilitate bill payments, along with a payment license. The fintech currently boasts a marketplace featuring 25,000 products.
Despite an increase in income to ₦93 million during the first nine months of 2024, Zest Payments widened its losses to ₦1.89 billion. The full-year financial report for 2024 has not yet been released at the time of this report. The recapitalization initiative reflects Stanbic IBTC’s commitment to revitalizing its fintech ambitions and positioning Zest Payments for future profitability in a rapidly evolving and competitive market.
