Acquiring Konga And Unity bank Plc Will Reposition Interswitch [Video]

Acquiring Konga And Unity bank Plc Will Reposition Interswitch [Video]

This is a videocast supporting our proposal for Interswitch to buy Konga and Unity Bank in order to deepen its competitiveness through a well differentiated platform.

Interswitch has been heralded as a future unicorn, a private technology company with valuation of at least $1 billion, by TechCrunch. Then, it was expected that Interswitch would go public in the Nigerian Stock Exchange and London Stock Exchange, in 2016. That exit, through IPO, did not happen and it would be assumed that Helios was disappointed.

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We propose for Interswitch to buy a bank and Konga. Together, both will provide growth drivers which will be catalytic. Public traded Unity Bank is worth about $31 million according to Bloomberg Markets. Interswitch could pay a premium and acquire it for $40 million;  Konga is worth about $34 million.

 

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9 thoughts on “Acquiring Konga And Unity bank Plc Will Reposition Interswitch [Video]

  1. Acquiring a Bank will put Interswitch at a disadvantage in my opinion. Interswitch presently plays multiple platform provider and Fintech roles providing interoperability for Financial institutions and other Fintechs. The acquisition of a Bank will position Interswitch as a direct competition to the Bank’s it serves and earn’s from today. The Bank’s may react by cutting off from it’s services making Interswitch lose it’s high market share as a payment service/ platform provider.

    Reply
    1. Acquiring a Bank will put Interswitch at a disadvantage in my opinion. Interswitch presently plays multiple platform provider and Fintech roles providing interoperability for Financial institutions and other Fintechs. The acquisition of a Bank will position Interswitch as a direct competition to the Bank’s it serves and earn’s from today. The Bank’s may react by cutting off from it’s services making Interswitch lose it’s high market share as a payment service/ platform provider.

      Reply
  2. That is indeed a good point except that most of the banks are increasingly using alternatives. The reality is that switching and what Interswitch cannot protect it from these banks, and it cannot rely on them for growth, because as the market opens, they will look for alternatives. Had Interswitch be pan-African, this risk will be minimal. We do not see how a bank that operates in say 10 African countries using different solution providers on what Interswitch offers cannot consolidate to save cost as more players emerge.

    Having a bank license can help this firm to pioneer a truly Internet-only banking since it understands digital. It pays it to disrupt itself from internal than to be made irrelevant in near future.

    Reply
    1. That is indeed a good point except that most of the banks are increasingly using alternatives. The reality is that switching and what Interswitch cannot protect it from these banks, and it cannot rely on them for growth, because as the market opens, they will look for alternatives. Had Interswitch be pan-African, this risk will be minimal. We do not see how a bank that operates in say 10 African countries using different solution providers on what Interswitch offers cannot consolidate to save cost as more players emerge.

      Having a bank license can help this firm to pioneer a truly Internet-only banking since it understands digital. It pays it to disrupt itself from internal than to be made irrelevant in near future.

      Reply
      1. I do not agree with your viewpoint. “Acquiring a Bank will put Interswitch at a disadvantage in my opinion. Interswitch presently plays multiple platform provider and Fintech roles providing interoperability for Financial institutions and other Fintechs. The acquisition of a Bank will position Interswitch as a direct competition to the Bank’s it serves and earn’s from today. The Bank’s may react by cutting off from it’s services making Interswitch lose it’s high market share as a payment service/ platform provider.” This has captured my opinion.

        Reply
        1. Good insight except that in 5 years most of the banks will not be needing Interswitch. For Interswitch to survive owing to the competitions from Visa, Mastercard, Paystack, Flutterwave, etc it needs to evolve as a digital-only bank.

          Reply
          1. Agree totally with you. Good thing interswitch did not go public….. shareholder might just have exited…competing biz already and like you said other major players now in the industry…interswich will need to sell a new vision for investors to buy in…maybe ecoms but bank purchase must be well articulated, can be tricky

  3. In my opinion evolving as a bank will put interswitch at a disadvantage, only if the business of banking is not well managed. Given their role in the payment system, along with Konga, they can actually create an unbeatable brand. However, like I said, management of the bank must be gotten right for such a business to succeed in the Nigerian financial space.

    Reply

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