Interswitch allegedly on the path to UK IPO

The fintech firm, majority owned by private equity group Helios Investment Partners, provides much of Nigeria’s digital finance infrastructure. Founded in 2002, Interswitch’s product platforms process the bulk of the country’s growing volume in electronic bank, government, and corporate financial transactions. In personal finance, 32 million consumers use the company’s Verve chip and PIN cards, while its Quickteller digital payment app processed USD 2.4 billion in transactions.

On a pending IPO, Interswitch CEO and founder Mitchell Elegbe confirmed, “a dual-listing on the London and Lagos stock exchange is an option on the table. 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, techcrunch.com reports.

Though Interswitch’s CEO didnt confirm a 2016 IPO, two sources said the company’s listing is a fact. “They’ve already selected the ibankers and will likely go public sometime between Q2 to Q4 at (or close to) a USD 1 billion valuation–roughly two times revenues,” said Eghosa Omoigui, Managing Partner of EchoVC, a Silicon Valley fund investing in African startups.

In countries such as Nigeria, Kenya, and Ghana,broadband capacity is improving, smartphone penetration is rising, and many business sectors are formalizing. Added to this are the demographics of a youth driven consumer market expected to spend over USD 1 trillion annually by 2020.

This equation creates strong tech opportunities for ventures focused on digital commerce and payments. Some VC investors have taken note, supporting African consumer goods, digital content, and fintech oriented startups to the tune of USD 400 million in 2014, according to Crunchbase supported research. Interswitch investors Helios Partners and Adlevo Capital also back ventures such as ecommerce platform MallforAfrica and Nigerian payments firm Paga.

When it comes to digital finance in Africa, discussions usually lead to Kenya’s M-PESA product, run by telco Safaricom. The mobile money platform, recently profiled by “60 Minutes,” is now used by 13 million customers, transfers USD 12 billion in P2P payments annually, and generated 20% of Safaricom’s 2014 USD 1.5 billion revenues.

Many point to Nigeria as the continent’s greatest revenue opportunity for electronic payments given its dual status as Africa’s most populous nation (175 million) and largest economy (USD 510 billion). Consumers in the West African country spend USD 400 million annually and are projected to generate USD 75 billion in ecommerce revenue by 2020.

Nigeria’s P2P digital payments traffic compared to Kenya, however, has been slower to scale–largely due to entrenched consumer preferences for cash and a more cumbersome fintech regulatory environment. A 2014 Gates Foundation study estimated Nigeria’s e-payments revenue potential at USD 1.2 billion if it attained Kenya’s volumes.