Nigerian Digital Bank FairMoney Eyes Kenyan Expansion Through Potential Umba Acquisition.

20 Feb 2024

Nigerian digital bank FairMoney is in preliminary discussions to acquire Umba, a credit-led digital bank operating in Nigeria and Kenya, sources with knowledge of the matter told TechCrunch.

The potential all-stock deal valued at $20 million reflects FairMoney's strategic move to expand its customer base into new markets, specifically Kenya. However, it also highlights the current challenges faced by African fintech startups amid a global tightening of venture capital funding.

Umba, founded in 2018, offers banking services like loans, accounts, and bill payments. Although the company has secured $20 million in funding, its recent financial performance with revenues of $335,000 and expenses of $1.54 million in the first half of 2023 might raise questions.

FairMoney, with over $57 million raised and valued between $400 million and $500 million, has been seeking expansion opportunities. While its entry into India in 2020 showed initial momentum, recent updates on that market performance are unavailable.

Beyond Kenya's market potential, FairMoney might be particularly interested in Umba's microfinance license obtained in 2022. Acquiring this license could streamline FairMoney's entry into Kenya, bypassing the lengthy licensing process.

This potential acquisition comes amidst a changing landscape for African fintech. With tighter VC funding, established players like FairMoney are exploring M&A opportunities. Just this month, Nigerian neobank Carbon acquired SME-focused banking service provider Vella Finance.

While negotiations are still ongoing, this potential deal signifies FairMoney's ambition for regional expansion and Umba's need for strategic options considering its financial realities. Both companies and the broader African fintech scene await the outcome of these discussions.

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