Opera Launches Nanobank As it Divests Nigerian Subsidiary

Opera Launches Nanobank As it Divests Nigerian Subsidiary

Opera, a leading global internet brand has announced the launch of a new addition to its number of businesses. The Norway-based company announced through its Q2 financial report, the creation of Nanobank, to reach more markets around the world.

“Opera today announces the formation of Nanobank, creating the largest emerging markets dedicated fintech companies in the world. Nanobank is being created by consolidating the relevant businesses and technology platforms from Opera with those of Mobimagic, reaching a combined registered user base of approximately 50 million people,” the company said in a statement.

Opera is focusing on fintech in the wake of COVID-19 disruptions. Combined earnings of Mobimagic and Opera generated $209 million in revenue and a pre-tax profit of $68 million in 2019, and $120 million in revenue on $10 million loans disbursed with a total value of $686 million, the company said.

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The impressive result has inspired Opera to seek expansion into new markets. The chairman and CEO of Opera, Yahui Zhou said fintech offers the company enormous space to make profit, and they intend to expand into new markets through the consolidation of their successful companies.

“Our ambition and potential in the fintech space enormous. We are now taking the next steps to further boost this business – making it even larger, consolidating profitability between two highly successful companies, and realizing benefits of scale to support attractive cash generation,” Zhou said.

He explained that Nanobank will operate as a separate company, to enable flexibility for both Nanobank and Opera, including the chance to take strategic investors or float shares.

The company said it is looking to do financial businesses beyond microlending, though it has yielded significant growth despite the downturns of COVID-19. Nanobank expects to fuel growth through scaling in existing markets, continued geographic expansion, and from the launch of financial services beyond microlending.

Opera will own 42% of the equity interest in Nanobank, while Mobimagic’s shareholders will own a combined 58%. The company said it expects to report a one-time gain in the third quarter as a result of the Nanobank transaction, currently estimated to exceed $100 million as Nanobank becomes an equity accounted investee for Opera.

Opera’s CFO, Fred Jacobsen said that the company’s users’ metrics have stayed strong and year-over-year revenue trends have improved monthly since it plummeted in April, due to the impact of coronavirus.

However, the company reported a slow recovery of its microlending revenue, and said 42% of it would be replaced by the newly introduced Nanobank results.

“Microlending revenue and OPEX will be replaced by our 42% of Nanobank’s results as of August 20th” as it is expected to show “strong sequential revenue growth in the third quarter and expand margins as the business scales back up.”

Among the newly introduced initiatives are OList and European fintech, which is expected to start generating limited revenue in the 2H of the year, although 2021 is the targeted year. Opera’s co-CEO, Song Lin said the initiatives have been encouraged by the inflow of 379 million active users as of July, and the European fintech is being tested in Spain as the company aims to capture European markets.

“We continue to push forward on our new initiatives such as OList and European Fintech, and we are pleased with the progress we’ve made over the last several months. We are now testing our initial and innovative buy-now-pay-later product, in our first major market, Spain.

“We’ve acquired a small number of users already with plans for a formal launch later in the year, all of which is aimed at having European Fintech become a significant contributor to revenue next year,” he said.

Lin acknowledged that the push to expand into European and North American markets has been spurred by the growth in Africa and Asia where it has many thriving products especially, financial services.

Although Opera recorded 10% revenue decrease to $55.4 million, the overall performance of its businesses resulted in the reported gains.

However, Opera said it has made a $6.1 million divestment from a Nigerian subsidiary without mentioning a name. Therefore, it has left many wondering which of its Nigerian subsidiaries it could be.

Analysis run by Techcabal pointed at Okash. Opera’s Q2 report highlighted the progress of its services in Nigeria, excluding Okash. The software company acquired OKash from OPay in December 2018 for $9.5 million, but the lending service has proved to be lagging behind its counterparts in India and Kenya.

The Q2 report noted that Kenya with OPesa and India with Cashbean have been Opera’s biggest market in lending, with average loans of $40 and $50 respectively, while Nigeria’s Okash was notably omitted. Opera mentioned countries it’s planning to take its Nanobank operations to, and Nigeria isn’t one of them.

This development suggests that the divested company must have been OKash, and that OPay must have snapped it up.

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