Could Interswitch be Africa’s First Unicorn?Author: Mikki Donaldson
CBInsights (venture capital database), reports that there are at least 150 alleged “unicorns” or privately held start-ups that are valued at $1 billion dollars worldwide. The London Stock Exchange has over 120 listings for Africa. With recent developments of Nigeria’s electronic payments and payment card mammoth, could Interswitch be Africa’s first “unicorn?”
Look mum… An Interswitch Unicorn!
Interswitch’s founder, Mitchell Elegbe says that “a dual-listing on the London and Lagos stock exchange is an option on the table,” though the CEO would not confirm a public offering in 2016. But “It’s not the only one,” he explained, “to facilitate potential exits” by the company’s private equity investors. “We are also looking at a possible trade sale,” Elegbe said on a telephone call from Lagos.
It’s not entirely clear why they are being so secretive. The highly publicized scoop is that they will go public. They’ve even pre-selected the backers to go live during the second or fourth quarter year. Not only that, but they are at a billion dollars in revenue, according to Eghosa Omoigui who’s the managing partner for EchoVC (a fund investing mainly in start-ups for Africa).
What else is in sight?
Aside from Interswitch’s IPO, the delivery of the smartphone is very big news. With the expected influx of over 360 million smartphones over the next 9 years, the people who use the internet will naturally increase, according to McKinsey Consultants.
Herman Chinery-Hesse, a major enterpriser, is optimistic about these developments and Africa as it depicts Interswitch as a unicorn in the international market. Investors are looking to take part in this market by offering merchandise insurance through Jumia. Right now, Jumia is not in many of the countries, although it’s in 11 of the African markets and have a reported €206 million in sales.
Kenya still has the lead mainly because of Safaricom’s M-PESA product. They have roughly 13 million customers, bringing in a revenue of $300 million. McKinsey reports the market as being mostly driven upward by those in a young age group. Targeting young cell phone users will likely increase payments-processing worldwide.
The Verve card
The Africa Internet Group has a set up much like that of Amazon. Because of this, the demand for purchasing online increased considerably as did the demand for a payment processing center. With booming sales, AIG was the first start-up company to reach a billion dollars.
Verve is Nigeria’s prime bank card and the sole processing company connected to all of the financial institutions in the country. Approximately 32 million active consumers use Verve chips and PIN based cards.
Verve’s Quickteller handles $2.4 billion in payments and financial transactions. Its issued by over half of the banks there and is the only chip-and-pin card, which is accepted at 10,000 automated tellers (ATM) or at 11,000 Point of Sale terminals, via internet and physically at 16 of the 24 banks in Nigeria.
The opinion of Babatunde Soyoye, co-founder of Helios Investment Partners, is that Interswitch is successful by means of an incredible management staff who own analytic insight and creative resources, plus the support of the Central Bank Nigeria.
If you are wondering could Interswitch be Africa’s first “unicorn,” you should stay calm; spotting an Interswitch unicorn is very possible at this point.