The $288 Million African Exit

The $288 Million African Exit

The decade of 2000 was the decade of voice telephony. The 2010s was the decade of mobile internet. Today, we are in the decade of application utility where software systems would be used to fix frictions in sectors which are yet to be digitally transformed. Logistics, payment, lending, retail, etc would all evolve in Africa.

The entrepreneurs, the high priests of these movements, would receive higher calls, not from IPOs, but pure buyouts. Yes, exits would ramp out in Africa as founders and early investors begin to cash out. Yes, with lackluster public exchanges for technology companies, most exits would be via acquisitions.

Dubai-based Network International Holdings plc is acquiring  Kenya’s DPO Group, an online commerce and fintech platform in Africa, for $288 million.

—press release below

Network International Holdings plc (the “Company” or “Network International”), the leading enabler of digital commerce across the Middle East and Africa (“MEA”), is pleased to announce that it has entered into an agreement to acquire DPO Group (“DPO”), the leading, high-growth online commerce platform in Africa, for a total consideration of approximately USD288 million (the “Transaction”). The consideration will be almost entirely funded through the proceeds from an equity placing representing 10.0% of the Company’s existing issued share capital, USD50 million vendor consideration shares issued to Apis Growth Fund I, managed by Apis Partners (“Apis”), USD13 million consideration shares issued to the DPO co-founders, with any small remaining balance to be funded via existing debt facilities.

DPO is the largest online commerce platform operating at scale across Africa

  • Rapid growth profile with revenue CAGR of c.40% from 2017-2019 and Total Processed Volume (“TPV”) CAGR of c.30% from 2017-2019. Revenues of USD16 million in 2019
  • Leading e-commerce and mobile money services for >47,000 merchants across high quality brands
  • Present in 19 countries across Africa with South Africa, Kenya and Tanzania representing major markets. Multiple distribution channels with on the ground presence to recruit merchants, combined with direct connectivity to acquiring banks

Strong strategic fit and growth accelerator for Network International

  • Market: consolidates and accelerates our presence in Africa, the most underpenetrated and fast growing payments market in the world. Africa expected to represent c.40% of Network International total revenue by 2024 (27% in 2019), giving us an evenly balanced business in Africa across Merchant and Issuer Solutions
  • Distribution and relationships: brings direct merchant and Mobile Network Operator (“MNO”) relationships, broadening our business in Africa across the entire payments value chain
  • Capabilities and innovation: widens our capabilities and exposure in fast growing online payments and mobile money, enabling merchants to accept a wide range of payments methods
  • Cross selling opportunities: combined incremental capabilities and solutions provide significant cross-sell opportunities to both Network International and DPO customers
  • Disciplined capital allocation: acquisition expected to be broadly EPS neutral in 2022, including integration costs. Double digit ROCE within 3-4 years, and significantly higher thereafter

DPO has seen strong current trading, following Covid-19 lockdowns

  • Digital and online payments market in Africa expected to grow at 19% CAGR [1] over the next five years and Covid-19 expected to accelerate this growth
  • E-commerce penetration in Africa is 0.3% of private consumption, versus c.5% in the United Kingdom and c.17% in China [2]
  • Following stringent lockdowns in DPO’s main market of South Africa during April:
  • DPO signed c.4,400 merchants in June 2020, an all-time high
  • TPV growth year-on-year was 27% in May (57% in constant FX) and 27% in June (49% in  constant FX)

Financing and structure

  • DPO Co-Founders incentivised and aligned through rollover of USD13 million of their DPO ownership into Network International shares (the “Co-Founders Consideration Shares”) and a two year holding period (from the point of acquisition signing)
  • Acquisition consideration to be almost entirely financed through proceeds from a 10% equity placing, USD50 million vendor consideration shares issued to Apis (subject to a three month lock-up from the point of acquisition completion), and the Co-Founders Consideration Shares, with any small remaining balance funded by existing debt facilities
  • Completion of the Transaction is expected in Q4 2020, subject to customary closing conditions including regulatory and anti-trust

Simon Haslam, Chief Executive Officer, commented:

“We are excited by the proposed acquisition of DPO, the leading high-growth online commerce platform operating at scale across Africa. Africa is a vast and diverse continent, representing the world’s most underpenetrated, nascent and fast growing payments markets, where we have seen recent signs of an acceleration in those trends. DPO will further consolidate our presence in Africa, strengthen our position across the entire payments value chain and accelerate our growth. This acquisition will widen our capabilities across online, mobile and alternative payments; bring an extensive and diverse range of direct merchant relationships to our business; and provide a wider range of solutions for our existing customers. We look forward to bringing our two businesses together and welcoming DPO’s colleagues into our group. Together, we have a powerful combination to accelerate digital payments across our regions and deliver significant shareholder value.”


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4 thoughts on “The $288 Million African Exit

  1. If we choose to go this route in Africa, we may end up just creating few dollar millionaires, with no big brand having African heritage. We need to be more intentional, and learn to build trans-generational business empires, so that the coming generation can have something to consolidate and build on.

    Africa cannot just exist as a continent of serial entrepreneurs, yet with no enduring corporations, else it would remain a developing continent for centuries, always starting up, without ever maturing.

    While the lure for fat dollar cheques is strong, we still need to balance things up, except we have accepted to remain the testing ground for the rest of the world.

    We have cocoa in abundance, yet couldn’t own the largest chocolate factory in the world, and we think we are doing well…

    1. While I strongly buy into your sentiment, I think Africa and Africans still don’t have the basic foundation to build endearing trans generational business like you suggested. Foundations like visionary political leadership that can create a direction for everyone to chat. From which also stem strong supporting policies, strong education and other human development structures and other ingredients and values that make society become an innovation driven society.

      There is no social incentive to build such empires let alone having the right kind of workforce or people to help build this. As no one man can build such empire alone.

      My opinion simply is,
      – Create a vision of that empire we want.
      – Start by creating innovative products and businesses that are both scalable and sellable.
      – Build such businesses and make them attractive to prospective buyers in the future and learn all you can in the process.
      – Develop people you can possible work for
      you later in your main “empire vision”
      – Position your business to be bought over.
      – Once sold, you now have all the money, all the learning, all the network and a bit of the political clout since they know you have the money.
      – Then you can start that other empire because now you have all the money to buy the best brains, influence any policy (ethically), scale to any point and build that legacy in Africa and also build enough hedges to protect your empire.
      – This way, you are building from a position of strength not uncertainty or weakness.

      We have a long way to go in Africa but we just need to be more strategic with a long term approach. But just now, we are not doing well at all ….

    2. Your take on building corporations is spot on. However, that is more a call on existing homegrown/owned corporations to buy up, and/or support startups to scale to becoming enterprises, which is what the Dubai group is doing here.

      Startups and it’s inherent financing structures necessitate “exits” via acquisitions, for example.

      1. If this is the route you are proposing, then I concur fully. But it may not produce such huge home grown empires like in the west as to make us relevant on the world’s stage.
        Several strategies will cut it. We just need to act fast.


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