Fintech Lesaka announced yesterday it completed the acquisition of payment processor Adumo RF (Pty) Ltd (Adumo).

The transaction was completed with the issuing of 17,279,803 shares of Lesaka's common stock and a cash payment of $13.4 million, resulting in a total purchase consideration of $96.2 million based on Lesaka's October 1, 2024 closing price on the Johannesburg Stock Exchange.

In fulfilment of one of the conditions of the transaction, according to the company, Lesaka agreed to purchase 2,601,410 shares of its common stock through a wholly owned subsidiary for ZAR 207.2 $12.0 million, or ZAR79.66 per share.

This will provide cash liquidity to a group of indirect Adumo shareholders who were unable to receive Lesaka shares under their investment mandates. The transaction is expected to be completed in early October 2024.

The company believes the acquisition of Adumo, one of South Africa's largest independent payments processors with over 20 years of experience in payment solutions, strengthens Lesaka's position in the Southern African fintech space.

It adds that the acquisition enhances the company's strengths in both its consumer and merchant markets' and follows the successful merger of the Connect and Kazang businesses, as well as the recent acquisition of Touchsides.

Adumo has over 20 years of expertise delivering integrated payment solutions to roughly 23,000 active merchants in South Africa, Namibia, Botswana, and Kenya.

Adumo operates across three businesses, which provide payment processing and integrated software solutions to different end markets:

• The Adumo Payments business offers payment processing, integrated payments and reconciliation solutions to small and medium (SME) merchants in South Africa, Namibia and Botswana, and also provides card issuing program management to corporate clients such as Anglo American and Coca –Cola.
• The Adumo ISV business, also known as GAAP, has operations in South Africa, Botswana and Kenya, and clients in a further 21 countries, and is the leading provider of integrated point -of-sales software and hardware to the hospitality industry in Southern Africa.
• The Adumo Ventures business offers online commerce solutions (Adumo Online), cloud-based, multi-channel point-of-sales solutions (Humble) and an aggregated payment and credit platform for in -store and online commerce (SwitchPay) to SME merchants and corporate clients in South Africa and Namibia.

Adumo generates the majority of its revenue from per transaction fees that are calculated as a percentage of transaction value, and software-as-a-service subscription fees charged to merchants. 

As of June 30, 2024, Adumo employed approximately 950 employees throughout Southern Africa.

Commenting on the completion of the transaction, which was first announced in May, Lesaka CEO Southern Africa Lincoln Mali says: "It significantly enhances our technology platform, adding customers, solutions, and meaningful scale.

“Lesaka's full-service fintech platform will serve 1.7 million active consumers, 120 000 merchants, and process over $15,5 billion in throughput ($2.6 billion card, ZAR $6 billion VAS and $6,9 billion cash) per year in our connected ecosystem as we facilitate the digitization of commerce in our markets .

“The Group will have over 3 300 employees operating on the ground in 5 countries: South Africa, Namibia, Botswana, Zambia, and Kenya.”

He adds: “I would like to extend a warm welcome to all the Adumo employees, as well as Adumo chief executive Paul Kent who joins our executive leadership team. Paul will take responsibility for our merchant pillar. 

"I would also like to welcome Crossfin chief executive Dean Sparrow who joins our board as a non-executive director and our new shareholders – Apis Growth Fund I and African Rainbow Capital, the largest shareholder of Crossfin.”

While, Kent notes: "Our businesses are a natural fit with the combined solution set, distribution network and technologies positioning us perfectly to take advantage of the digitisation across our economy. We continue to innovate and expand the holistic suite of products and services offered to our merchants in solving for their pain points."

According to Steve Heilbron, head of corporate development at Lesaka, the acquisition significantly broadens Lesaka's product offering to its customers and increases the company's penetration in both the merchant and consumer categories.

He went on to say: This will accelerate our growth profile. The combined scale and solutions of our fintech platform significantly enhances our ability to innovate and disrupt a s well as providing a beachhead into new markets opportunities.”