937 million rand acquisition will be Actis’s 5th investment in the payments industry in three years. Paycorp has been a wholly-owned subsidiary of Transaction Capital since 2006.
“Transaction Capital’s business and the businesses of payments are not necessarily linked. They’re both in the financial services sector but they’re not two businesses that necessarily sit next to each other, hence that was the reasons why we approached Transaction Capital a couple of months back,” Actis partner Natalie Kolbe told CNBC Africa on Wednesday.
“So the business that we are invested in on the African continent is specifically payments businesses and we are also invested in some banks but they are not related to Transaction Capital’s business at all.”
Actis has invested in a number of banks on the continent through their payments investment businesses and also have links to close to majority of the financial services on the continent.
“These businesses are all linked. The payments value chain is linked from one end to the other, so they’re all looking for partners and Paycorp were looking for partners on the African continent so it’s out way of being able to bring the two together,” Kolbe explained.
A private equity partner can however be a double-edged sword. On the one hand, the partner in question brings capital but on the other they can just as easily exit a deal.
“We’re aligned to create value, we’re really hoping that the Actis network and balance sheet and the Actis opportunities that present themselves will be for value creation for everybody. I don’t have an eye on the door, great businesses in time fetch lots of money and we’ll see how that plays out,” said Paycorp founder and CEO Steven Kark.
According to Kark, Paycorp has developed an operational IP address that has relevance in a number of emerging markets and not limited to Africa alone. Paycorp products range from ATMS, bank card products, point of sale merchant acquiring and mobile and transaction processing.
Much of Paycorp’s penetration is in rural areas of countries, where a large portion of its network has been deployed to the peri-urban regions which had been previously underserviced by commercial banks. Paycorp also has a 16 per cent marketshare on the ATMS in South Africa.
“The expertise that Paycorp have built around being able to penetrate the emerging consumer is exactly the kind of trends that we see on the rest of the continent. That was a very key attraction of the company for us,” said Kolbe.