Private equity firm Actis has agreed to buy the payments and ATM business of South Africa’s Transaction Capital (TCPJ.J) for $95 million, targeting the growth of debit cards and electronic payments among millions of low-income shoppers.

Actis, a London-based firm focused on emerging markets, will pay 937 million rand ($95 million) for Johannesburg-listed Transaction Capital’s Paycorp unit, the companies said.

Paycorp’s founder and chief executive and his team will be co-investors in the deal.

Paycorp operates more than 4,000 ATMs across South Africa and provides card payment terminals to shops and restaurants.

While South Africa has the continent’s most sophisticated banking network, there are still millions of people who rely solely on cash. Actis, which has done a series of deals in the payments industry, is betting those shoppers will begin to use cards.

The 937 million rand price values Paycorp at 7.3 times its latest full-year EBITDA, or earnings before interest, tax, depreciation and amortization.

It also represents more than double the 431 million rand Transaction Capital paid to acquire the business in 2007.

Paycorp’s main competitors are largely unlisted firms, including South Africa’s Spark ATM Systems and payment company SureSwipe.

Transaction Capital, which listed in Johannesburg in 2012, is a financial services firm focused on asset-back lending and credit services.

Shares of the company were up 4.6 percent at 6.85 rand at 0838 ET on Wednesday, valuing it at just under 4 billion rand.

Actis is one of several large private equity firms looking to do more deals in fast-growing Africa.

U.S. firm Carlyle Group (CG.O) in 2011 launched a $500 million Africa fund and is focused on South Africa, Nigeria, east Africa and Ghana for potential deals.

 

Source: Reuters (Reporting by Tiisetso Motsoeneng and David Dolan)