SOUTH AFRICA – Crossfin Technology Holdings, a fintech investment firm, has been acquired by a consortium of investors, including Patrice Motsepe’s African Rainbow Capital (ARC), for R1.5 billion (US$ 94.71m).
The consortium is led by Ethos’s Mid-Market Fund I and includes the founding Crossfin executive management team, EMMF I co-investors Ethos Artificial Intelligence Fund I, and empowerment investor ARC.
Fairview Partners acted as financial advisors for the transaction, which will see the exit of founding investors Capital Eye Investments and the Multiply Group.
“The transaction is considered a landmark deal in the fintech industry and will see Crossfin secure the required capital to pursue the next phase of its growth,” Crossfin said in a statement.
“The transaction is one of the largest private equity-led investments in the fintech sector in South Africa to date and offers the consortium exposure to an industry that has and is expected to continue benefitting from, among others, the secular trends of digitalisation and proliferation of payments technologies.”
ARC FSH will acquire 37.33% of Crossfin, via the consortium, for a consideration of R600 million (US$37.88m) which will assume a combination of acquisitive capital from the existing shareholders and growth capital for identified portfolio transactions.
The group said it commits to providing acquisition and growth capital in a R1.5 billion (US$94.71m) transaction.
“The transaction includes the provision of acquisition and growth capital to enable Crossfin to deliver on its vision of investing in fintech solutions in select markets on the African continent.”
Crossfin said it backs companies that focus on solving specific everyday pain points, not adequately covered by existing products in the market. It operates in industries that are set to benefit from the growing trend towards the usage of digital payments over cash.
“Crossfin’s portfolio and healthy partner ecosystem create exciting opportunities to integrate a broad suite of financial products and services to support local merchants and consumers on multiple levels,” it said.
Currently, its portfolio processes over 134 million card and 20 million mobile-enabled payment transactions per annum with an aggregated value of over R79 billion (US$4.99m).
“The transaction strongly positions Crossfin to leverage new technologies as they emerge,” said ARC Financial Services, adding that the deal is aligned to ARC Investments’ ambition to establish an ecosystem of fintech-related businesses.
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