Lesaka Technologies, a South African fintech company, announced yesterday that it had reached a definitive deal to acquire 100% of Touchsides, a data analytics, insights, and merchant services company, from Heineken.

The fintech said that Touchsides, and its subsidiary Kazang, are complementary to each other, and the acquisition is likely to extend Kazang's footprint in South Africa's informal tavern business.

South Africa’s licensed tavern market consists of an estimated 45,000 establishments and is a major vertical in South Africa's informal market and provides a significant growth opportunity for Kazang.

Kazang is a provider of cash and digital solutions to merchants in Southern Africa's informal economies.

Its solutions include value-added services (VAS), card acquiring, secure cash vaults and supplier payments platforms.

According to Lesaka, Kazang operates a network of over 75,000 active devices, and processes around 2.2 million transactions daily.

Yesterday, Lesaka, which is listed on the Johannesburg Stock Exchange and NASDAQ, said: “Touchsides has an active base of over 10,000 point-of-sale terminals across South Africa's informal licensed taverns, and processes more than 1.5 million transactions per day.

“The business provides platform-as- a-service and software-as-a-service solutions to licensed tavern outlets, enabling the measurement of sales activity in real-time, management of stock levels and informing commercial decisions, such as pricing and promotional offers.”

It added: “The data and insights gathered from these terminals carries significant value and potential to be monetised through relationships with a range of clients including fast-moving consumer goods companies, retailers, wholesalers, route-to-market suppliers, and financiers.”

Lesaka head of merchant division and CEO of Connect Steve Heilbron said: "Operating as an independent company unaffiliated to a major beverage supplier, we see a distinct opportunity to significantly grow Touchsides' tavern base and to monetise its real-time data.

“Additionally, we see opportunities for Kazang not only in providing services to Touchsides base, but also in leveraging its data monetisation experience and point-of-sale expertise across our large informal merchant base outside of the tavern industry."

Lesaka also owns Connect Group, which it acquired in November 2021 for R3.7 billion.

The fintech announced yesterday that the acquisition of Touchsides will be funded by the group's internal cash generation, and is slated to close in March 2024, subject to usual closing conditions.

As part of the transaction, Heineken's South African operating business signed a long-term renewable deal with Touchsides to have access to the latter's tavern data and services.