November 12, 2021/CSL Research
According to news reports, Flutterwave, a digital payment platform, has acquired Disha, a content creator. This is Flutterwave’s first acquisition since it was launched in 2016. Disha, a content creator, targets global creators and influencers, providing tools to create a onepage site to curate and share links, content, portfolios and a checkout system to receive payments. Disha was in the news earlier in the year, stating plans to shut down due to certain shortfalls with the platform’s vision and other misalignments. The acquisition amount was not disclosed. Recently, Flutterwave Inc was seeking fresh funding at a valuation of US$3bn or more, a figure that was to roughly triple its last valuation.
Fintech valuations remained very high in the nine months of 2021 as investors continued to see the space as attractive. According to CB Insights, following a record-breaking Q2 in the world of Fintech, investments in Fintech continued to climb to new highs in Q3 2021. Total Fintech funding in Q3 2021 grew 161% y/y to reach US$31bn. The yearly sum so far of US$91.5bn is already almost double 2020’s full-year total, and there is still a quarter to go.
Funding activity grew in nearly all FINTECH subsectors except for wealth tech and capital markets tech. The digital lending, banking, and SMB FINTECH sectors saw the most pronounced deal activity growth quarter on quarter.
Current valuations of Fintech are becoming significantly higher than those of many banks. These developments have led many banks with a vibrant payment system to consider either operating the payment business as a subsidiary like Guaranty Trust Bank has done or selling a stake of their payment business like FBN Holdings plans to do with First Monie. In our conversation with the bank and also based on communications from previous conference calls, the bank has been considering selling a stake in First Monie. Firstmonie is an official service from FirstBank through which customers in unbanked or underbanked regions can process financial requests through registered Agents and existing businesses.
Nigeria’s significantly under-tapped digital payments industry is poised for significant growth. A myriad of factors across industry fundamentals, positive country demographics, and regulatory support have formed the base of expected accelerated growth for the Fintech industry in Nigeria. This expectation has received much attention from investors, which has led to significant investments as existing players look to position for future growth. The Fintech industry in the country has seen funding rounds from various global investors since 2014, either through equity or grants. Fintechs in Nigeria raised over US$500m between 2014 and 2020 and with reports of over US$500m raised in the first 9months of 2021, the industry has attracted c.US$1bn. Increased funding, high valuations, and successful exits point to the fact that digital engagement of customers which intensified during the pandemic is here to stay.
To increase the competition in that space, earlier in the month, MTNN notified the exchange that it has received an approval in principle (AIP), dated 4 November 2021 from the Central Bank of Nigeria, for the license application for the proposed MoMo Payment Service Bank Limited alongside Airtel Africa for its SMARTCASH Payment Service Bank Limited.
