South Africa’s fintech Ukheshe to seek $100m for acquisitions

By David Whitehouse
Posted on Monday, 11 October 2021 15:51

Ukheshe non-executive director Prins Mhlanga, CEO Clayton Hayward, CFO Mike Smits and COO Anton van der Merwe. Photo supplied.

South African fintech Ukheshe Technologies will seek to raise up to $100m for acquisitions in the next 12 months, CEO Clayton Hayward tells The Africa Report.

The funding sought will be a combination of debt and equity. “There is always going to be consolidation in the industry” and Ukheshe wants to be involved, Hayward says in Johannesburg. A current funding round, which is seeking to raise $30m-$40m for current organic growth plans, will close in about eight weeks, Hayward says.

Ukheshe uses a cloud-based Application Programming Interface (API), which employs artificial intelligence to provide back-end capability for financial-services providers. The solution is used in areas such as customer onboarding, digital payments, card provision and cryptocurrencies. Haywood says the company’s niche is [in offering] “fintech as a service.”

  • Ukheshe aims to provide the “common fabric behind fintech propositions in emerging markets,” he says, and is targeting “anyone who wants to scale quickly” as customers.

The company aims to [increase] its African presence from the current 15 markets to 40 in the next 18 months, Hayward says. He aims to establish a footprint in North Africa in the next 18 months. “It’s important to grow as quickly as we can.”

The fintech industry is in a period of “hyper-accelerated” growth, Hayward says. “A rising tide lifts everyone and those who swim the fastest benefit the most.” Partnerships are a key part of the organic growth strategy.

  • Clayton says he’s “agnostic” about whether new partnerships will be with banks, telecoms companies or card providers, and says Ukeshse is equally able to partner with all three types.

Long haul

The company is owned by four founders, including Hayward, who all have a majority stake. Hayward says the founders are likely to lose control at some point as new funding is raised. He argues that there is “enough capital in the private equity market” for at least three more funding rounds, meaning there is no need to countenance an IPO at present. “From a business point of view, we are in for the long haul,” he says.

In South Africa, Hayward sees potential for growth through the country’s planned adoption of a Rapid Payments Programme (RPP) in 2022, which will allow instant transfers using just email addresses or mobile phone numbers. The company, he says, is well positioned to play a “key strategic role” in RPP adoption.

Current partners include MTN and Vodafone. In September, Ukheshe agreed to a partnership with Chipper to accelerate the rollout of Chipper’s digital payment offerings. Chipper operates in eight African countries. In August, Ukheshe partnered with card solutions and digital security company dzcard.

  • The company plans to establish a presence in French-speaking West Africa by the end of this year, by which time it may also expand to Morocco or Egypt.
  • Ukeshe, which has an office in Singapore, is seeking opportunities for expansion in Thailand, Vietnam, the Philippines and Indonesia.
  • The company has moved some employees to Dubai and is aiming for a presence in the Middle East in the next 18 months.
  • Clayton says he is also keen to find ways to enter Latin America.

Bottom line

Ukheshe is betting that its technology is a natural fit for financial-service providers globally.

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