Last week, Nigerian fintech, Rise made a significant move by acquiring Kenyan wealthtech startup, Hisa, for an undisclosed fee.
This marks Rise's second acquisition within a year, following its purchase of Nigerian competitor Chaka in 2023.
Hisa's CEO, Eric Jackson, will now become the startup's CTO while Finance Associate, Leah Njoroge, will be promoted to Head of Operations. Both leaders will report to Eke Urum, Rise's CEO.
Hisa will retain its name, which Urum says resonates with the Kenyan people and could be a pointer to Urum's outlook on acquisitions. Following the Chaka acquisition, he noted that "both companies will continue to work on their product roadmaps and collaborate to improve products."
A look at Africa's wealth management sector
The need for financial stability is one that most, if not all, humans have. But for the average African without the safety net that governments provide, this need is heightened.
Africa's wealth management sector is still in its infancy compared to more developed markets.
Since 2012, the number of high-net-worth individuals on the continent has dropped by 12%. There are now 135,200 millionaires and 21 billionaires on the continent and that number is expected to grow to 195,000 millionaires by 2032.
After a brief period of economic growth, much of Africa has witnessed slow economic growth. Three of the continent's largest economies — Nigeria, South Africa, and Angola — will see less than 4% GDP growth in 2024, while Egypt will witness a 4% GDP growth.
Amid these poor economic outcomes, Africa's middle class is expected to continue growing at about 3% annually. The continent also has the largest population of young people, setting the stage for specialised wealth management services.
Don't miss out on Africa's financial revolution
Give it a try, you can unsubscribe anytime. Privacy Policy.
Traditionally, wealth management services have been the exclusive preserve of commercial banks and offered to high-net-worth individuals. However, technology has upended the financial services sector in the past 20 years.
Fintech has been the most funded startup sector in the past decade with behemoths like Flutterwave, MNT-Halan, Paystack, and Wave springing up in the process. These fintechs are unbundling financial services and democratising access.
Wealth management has not been left out. Since 2019, startups like Rise, Bamboo, Ndovu, Chaka, Thndr, and Trove Finance have launched wealth management and investment services. Savings offerings supplement their products from fintechs such as PiggyVest, Cowrywise, and Ladda.
Consequently, anyone with a smartphone can now access investment products previously reserved for the wealthy.
Beyond the emergence of fintechs, a growing dissatisfaction with available investment opportunities has driven demand for these services. The poor performance of local stock exchanges, slow economic growth, unpredictable government policies, and a high barrier to entry for investing in local stocks have contributed to an appetite for foreign investment opportunities.
Rise's value proposition
Rise simplifies investing for its users by leveraging on its team of experts to curate a portfolio of investment opportunities, which are then managed on behalf of users. This approach reduces the barrier to entry for users who lack the expertise or time to manage their investments.
Here, it differs from competitors such as Bamboo that allow users to choose what asset classes to invest in.
The platform provides users with access to US stocks, allowing them to invest in well-established companies like Hims, Tesla, and Amazon. This feature is particularly attractive in countries where local currencies tend to depreciate against the US dollar, and provides a haven for wealth preservation.
In addition to stocks, Rise offers investments in real estate through US-based real estate investment trusts (REITs). For risk-averse investors, Rise’s fixed-income portfolios, consisting of US government bonds and other low-risk assets, offer steady returns without the volatility associated with stocks.
A year of consolidation
Rise’s acquisition of Hisa is a significant development, not just for the two companies involved, but for the broader fintech ecosystem. It signals the growing competitiveness in the sector and continues a trend of consolidation in the fintech space.
In February 2024, Carbon acquired Vella Finance to drive its business banking offering. In 2023, Moniepoint acquired Kopo Kopo while FairMoney acquired Payforce.
As the ecosystem matures and less capital is invested, experts have predicted a consolidation of efforts to help startups derive more value and consequently provide a return on money invested.
Perhaps even more importantly, this acquisition and the 2023 acquisition of Chaka positions Rise as a leader in the tech-enabled wealth management and investment space. The fintech has over 600,000 users according to information on its website. It's unclear how many users Hisa and Chaka currently have but both companies have seen their apps downloaded over 100,000 times on the Play Store.
Rise's acquisition of Hisa opens up opportunities in Kenya, a key hub in East Africa. With regulatory approval in Kenya a tough nut to crack, it can get straight to business.
Both acquisitions suggest that Rise's preferred method for scaling is acquisition. By bringing competitors and complementary services into the fold, it not only diversifies its product offerings but also positions itself as a dominant player in the African fintech sector.
Looking ahead
With a presence in two of the largest economies on the continent, Rise is well-positioned to strengthen its position. But that would come with its challenges. Launching in a new country will require adapting to new customer demands, and the startup may need some time to understand the Kenyan market. Yet, the opportunities are vast.
With this acquisition, Rise can expand and become a pan-African wealth management leader, providing investment opportunities to a broader audience and driving financial inclusion.
