The news:
- FairMoney, a Nigerian fintech, is reportedly in talks to buy Umba, a neobank with a presence in Nigeria and Kenya markets, for a $20 million all-stock offer.
- The Paris-headquartered neobank, already established in Nigeria, will grow its customer base by the time the deal closes, expanding into more African markets, beginning with Kenya.
- According to reports, the acquisition negotiations are still in the early stages, and neither FairMoney nor Umba has provided any details about the transaction.
This agreement will help FairMoney enter the Kenyan market by bypassing Umba's three-year licencing process. The acquisition will also enable FairMoney to expand on Umba's existing infrastructure. The combined capabilities of both fintechs will also improve their offerings.
Tiernan Kennedy and Barry O'Mahony founded Umba in San Francisco in 2018 as a credit-led digital bank targeting emerging markets, specifically Nigeria and Kenya, where it provides customers with payroll and financial services such as loans, accounts (savings, current, and fixed deposit), and bill payments.
Since its inception, Unmba has raised about $20 million in funding, roughly equivalent to the value of its all-share deal.
So far, its investors include Costanoa Ventures, ACT Ventures, Lux Capital, Palm Drive Capital, Banana Capital, Streamlined Ventures, and individuals like Lachy Groom and Tom Blomfield (co-founder of Monzo).
FairMoney, on the other hand, has secured more than $57 million from investors, including Tiger Global, DST, and Speedinves. The digital bank's last valuation ranged between $400 million and $500 million.
Co-founded in 2017 by Laurin Nabuko Hainy (CEO), Matthieu Gendreau (CTO), and Nicolas Berthozat (CPO), FairMoney is an Africa-focused digital lending bank based in Nigeria. To grow its customer base and revenue, the company made an ambitious move into India in 2020, making it its second market. The success of this deal will make Kenya its third.
Since launching its digital lender app in Nigeria six years ago (2018), FairMoney has expanded its financial services to include debit cards, transfers, and payments. The company says it has more than six million retail customers.
In 2023, FairMoney acquired PayForce, a subsidiary of Y Combinator-backed Nigerian merchant fintech CrowdForce, in a cash-and-stock deal.
In a pitch deck obtained by TechCrunch, Umba said it earned only $335,000 in revenue while incurring $1.54 million in costs. This dire financial situation may make the FairMoney offer appealing.
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