More Africa NewsSouth Africa: Net1 gets green light for R3.7-billion Connect deal

March 11, 2022by myles0

JSE-listed Net1 UEPS Technologies has been given the regulatory green light for its acquisition of South African fintech company Connect Group in a deal worth R3.7-billion that it has described as “transformational”.

Net1, which has its primary listing on the Nasdaq in New York, said it has received approvals from the South African, Botswanan and Namibian competition authorities for the transaction, which will see it acquire 100% of the shares and claims in Connect Group.

Connect Group was founded in 2006 and provides fintech solutions to about 44 000 small, medium and micro enterprises in South Africa, many of which are in the informal sector.

The company offers four main product lines: a prepaid value-added services platform branded Kazang; a digitised cash management platform called Cash Connect; a merchant lending platform branded Capital Connect; and merchant acquiring solutions called Kazang Pay and Card Connect.

Though the Namibian and Botswanan competition regulators have attached no conditions to their approvals of the deal, South Africa’s Competition Commission has imposed various conditions, including that:

  • It must increase the spread of ownership by historically disadvantaged people, including workers, and invest in supplier and enterprise development;
  • Net1 is required to establish an employee share ownership scheme that complies with certain design principles for the benefit of the workers of the merged entity to receive a shareholding in Net1 equal in value to at least 3% of the issued shares in Net1.
  • If within 24 months of the implementation date of the transaction, Net1 generates a positive net profit for three consecutive quarters, the employee share scheme must be increased to 5% of the issued shares in Net1.

“The final structure of the employee share option plan is contingent on Net1 shareholder approval and relevant regulatory and governance approvals,” Net1 said.

“Net1 has previously communicated its vision to transform into the leading fintech platform for underserved consumers and merchants in South Africa. The acquisition of the Connect Group significantly advances that vision and is transformational for Net1,” the company said on Friday. 

Source: Tech Central

Leave a Reply

Your email address will not be published. Required fields are marked *

© Copyright Extensia Ltd