A few days ago, I made two calls here and here: (1) Chinese tech firms will begin looking for Africa for growth because the future of digital technology in China is uncertain as the clampdown accelerates and China redesigns the architecture of its economy; (2) a digital challenger bank in Nigeria will buy a traditional bank in Nigeria to overcome the new N1 million cap which the Central Bank of Nigeria (CBN) has put on microfinance banks and fintechs. Most digital banks use microfinance bank licenses and microfinance regulations govern them.
Today, we are learning that Japan’s mega fund, SoftBank, is leading a $400 million raise in OPay, pushing the company to a valuation of $2 billion: “The company, founded in 2018, had an exclusive presence in Nigeria. It provided various digital services ranging from mobility and logistics to e-commerce and fintech at cheap rates for consumers.” Yes, within 3 three years, OPay has a market cap that is bigger than more than 80% of Nigerian banks. This shows the impact of technology in an industrial sector.
Chinese-backed and Africa-focused fintech company OPay raised $400 million in new financing led by SoftBank Vision Fund 2, Bloomberg reported Monday, valuing the company at $2 billion.
The round, which marks the Fund’s first investment in an African startup, drew participation from existing investors like Sequoia Capital China, Redpoint China, Source Code Capital, and Softbank Ventures Asia. Other investors, including DragonBall Capital and 3W Capital, also took part in the new financing round.
This news comes three months after The Information reported that the company was in talks to raise “up to $400 million at a $1.5 billion valuation” from a group of Chinese investors. The new financing also comes two years after OPay announced two funding rounds in 2019 — $50 million in June and a $120 million Series B in November.
(OPay, Kuda, etc depending on what CBN does on its new regulations may be looking at acquiring a full bank license or buying one of the small banks with all the funds they have. Do not count that playbook out.)
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Africa now runs on fintech because the largest raises have come from fintech. Interestingly, we are still at the infancy level of this redesign. Total consumer transaction volume in Nigeria is estimated to be in the range of $301 billion yearly according to Fletcher School and Mastercard, so even if OPay processes $2 billion monthly (its number in December 2021), there are many rooms to grow.
In addition, fintech has produced the most mega-rounds so far. TymeBank raised $100 million in February, Flutterwave bagged a $170 million round in March, while Chipper Cash secured $100 million in May. OPay’s raise is the largest of the lot and makes it the other African fintech unicorn asides from Flutterwave and the third unicorn after e-commerce giant Jumia. The three make up the five billion-dollar tech companies on the continent, in addition to Interswitch and Fawry.
If you keep records, the largest and most valued financial entity in Nigeria today is OPay, well above the market cap of any of Zenith bank, GTBank parent firm, etc. And they did it within 3 years. Now, you get the message when I say that the empires of the future belong to digital tech entrepreneurs in Africa. That was why I started Tekedia Capital Syndicate to open the doors for anyone to own a piece of these emerging companies of the future.
Comment on LinkedIn Feed
Comment: We need to make room for OPay in FUGAZ
My Response: To be fair, the current FUGAZ is stale: it needs to be GOFIZ as they are now the largest financial institutions in the land. Sure, Flutterwave, Interswitch and Opay are private. As I have predicted, by 2025, in the top 10 financial firms in Nigeria, 90% will be tech-firms. This is a cambrian moment and Nigeria is undergoing changes.
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The big guys are patting themselves on the back, getting high fives among themselves. Chinese backed, Africa focused; American backed, Africa focused; European backed, Africa focused, the new phrases in town. Quite tiring.
Now that Softbank has finally looked in this direction, we are waiting for Africa backed, global focused; or Africa backed, Africa focused; or Nigerian backed, Africa focused; etc, etc.
There is a big difference between the first sets and second sets, before you start wondering what happened to beautiful Mother Africa by 2030.
The seemingly old guys, the FUGAZ are locally owned, and we are marching to the era where all the most valuable financial firms are foreign owned and controlled.
If you haven’t been thinking, you can start now…