The International Finance Corporation (IFC), which forms part of the World Bank Group, and related funds managed by the IFC Asset Management Company are buying a 18% stake in South Africa- and US-listed technology group Net1 for US$107,7m (about R1,6bn).
IFC has agreed to subscribe for almost 10m shares of Net1’s common stock at a subscription price of $10,79/share, representing a 20,6% premium over the closing price on 8 April.
Net1 said in a statement to shareholders that it intends using the proceeds of the IFC investment mainly for the expansion of its business and technological solutions in emerging markets worldwide.
IFC is the largest global development institution focused on the private sector in emerging markets and invests in disruptive technologies to help expand access to financial services.
As of March 2016, it had invested about $180m in 26 financial technology companies servicing over 220m people, Net1 said. This is on top of billions of dollars already invested in its decades-long programme in support of traditional banks and microfinance institutions.
Closing of the investment in Net1 is expected to take place this month. IFC will have the right to nominate an independent director to the Net1 board.
News of the investment is a positive public relations development for the company, whose CEO, Serge Belamant, was embarrassingly forced to admit in February that he had purchased a fake PhD on the Internet. The board said at the time that Belamant had been the “unfortunate victim of a scam”.
In a statement to shareholders on Tuesday, Belamant described the IFC investment as a “landmark moment” for Net1. He said the deal is the largest investment ever in the financial technology sector by IFC.
“We are completely aligned with IFC through our shared vision of providing financial inclusion to the billions of unbanked and under-banked citizens of the world and we look forward to the opportunities presented by IFC’s expansive global network and expertise,” he said in the statement.
Atul Mehta, IFC Director of Telecoms, Media and Technology, said the investment in Net1 will allow the company to expand regionally, “especially into African countries where there is limited banking infrastructure and availability of financial services for the poorest segments of the population”. — © 2016 NewsCentral Media