Paris-based fintech, FairMoney, is currently in early-stage negotiations to acquire Umba, a neobank operating in Nigeria and Kenya, for a reported $20 million all-stock deal. The acquisition is expected to facilitate FairMoney’s entry into the Kenyan market, bypassing a three-year licensing process, and fortifying its presence in Africa.

Founded in 2018 by Tiernan Kennedy and Barry O’Mahony in San Francisco, Umba focuses on emerging markets, particularly Nigeria and Kenya. The neobank offers a suite of financial services, including payroll management, loans, and various account types (savings, current, and fixed deposit). Despite raising $20 million in funding to date, Umba reported a financial challenge with revenue at $335,000 and costs totaling $1.54 million, potentially making the FairMoney offer an attractive solution.

FairMoney, established in 2017 and headquartered in Nigeria, is a digital lending bank that has secured over $57 million in funding from investors like Tiger Global, DST, and Speedinves. The company expanded its services to India in 2020, making Kenya its next target market. With a valuation ranging between $400 million and $500 million, FairMoney boasts a customer base of more than six million retail users.

The impending acquisition is expected to not only expedite FairMoney’s entry into Kenya but also bolster its infrastructure using Umba’s existing capabilities. The combined strengths of both fintechs are anticipated to enhance their offerings and solidify their positions in the competitive African fintech landscape.

While the negotiation details are still undisclosed, this strategic move enables FairMoney to navigate the Kenyan market efficiently and benefit from Umba’s established presence. The acquisition aligns with FairMoney’s trajectory, following its 2023 acquisition of PayForce, a subsidiary of Nigerian merchant fintech CrowdForce, in a cash-and-stock deal.

Investors in Umba include notable names such as Costanoa Ventures, ACT Ventures, Lux Capital, Palm Drive Capital, Banana Capital, Streamlined Ventures, and individuals like Lachy Groom and Tom Blomfield, co-founder of Monzo. FairMoney, with a focus on digital lending, aims to leverage the acquisition to not only expand its customer base but also enhance its overall financial service offerings across multiple African markets.

As the talks progress, both FairMoney and Umba are yet to release official statements or provide specific details about the ongoing transaction. However, the potential synergy between the two fintech entities could shape the future landscape of digital banking in Africa.