Lesaka Technologies, the South African fintech company listed on Nasdaq and the Johannesburg Stock Exchange, has finalized its acquisition of Adumo, the country’s largest independent payment processor. The transaction, which cements Lesaka’s position as a leading fintech provider in Southern Africa, was settled through a combination of shares and cash. As part of the deal, a group of Adumo’s indirect shareholders will receive a $12 million cash payout, following conditions set during the acquisition.
Lesaka’s acquisition of Adumo was valued at approximately ZAR 1.67 billion ($96.2 million), comprising the issuance of 17.3 million shares of Lesaka common stock and a cash payment of ZAR 232.2 million ($13.4 million). The cash payment to Adumo’s indirect shareholders forms part of this larger deal, offering an exit for investors unable to hold Lesaka shares due to investment mandate restrictions. The share buyback will be completed by Lesaka through a wholly owned subsidiary at ZAR 79.66 per share, totaling ZAR 207.2 million ($12 million). This move is expected to provide liquidity to the shareholders and allow them to exit under favorable conditions.
Strategic Acquisition for Lesaka
The acquisition of Adumo is part of a broader strategy by Lesaka to expand its footprint in Southern Africa’s fintech ecosystem. Adumo, which has been operational for over 20 years, provides payment processing services to around 23,000 active merchants across South Africa, Namibia, Botswana, and Kenya. Its solutions cater to both small and medium-sized enterprises (SMEs) and large corporate clients, including major brands like KFC, McDonald’s, and Coca-Cola.
Lesaka’s CEO for Southern Africa, Lincoln Mali, expressed optimism about the acquisition, stating that it enhances the company’s technology platform, expands its customer base, and increases the scale of operations. “The addition of Adumo significantly bolsters our fintech platform, which now serves 1.7 million active consumers and 120,000 merchants, processing over ZAR 270 billion in annual transactions across our connected ecosystem,” Mali noted.
He also emphasized that the deal strengthens Lesaka’s position as a natural consolidator in Southern Africa’s fintech sector, building on previous acquisitions like Kazang and Connect, and facilitating the company’s broader goal of digitizing commerce in the region.
Adumo’s Role in the Deal
For Adumo, the acquisition represents a key milestone. Under the leadership of CEO Paul Kent, Adumo has become a prominent player in the Southern African payments industry, providing services that include embedded payments, merchant lending, and reconciliation solutions. Kent will join Lesaka’s executive leadership team, assuming responsibility for the merchant pillar, which is central to the company’s strategy moving forward.
“We are thrilled to be joining forces with Lesaka,” Kent said. “This deal positions us perfectly to capitalize on the ongoing digitization of the economy, with our combined solution set and distribution network set to drive growth and innovation.”
Adumo will retain its established business units, including Adumo Payments, which provides payment processing and integrated solutions to SMEs; GAAP, which offers integrated point-of-sale software to the hospitality industry; and Adumo Ventures, which delivers online commerce solutions and multi-channel payment platforms. These divisions are expected to complement Lesaka’s existing operations, creating synergies that will enable the combined entity to serve a broader range of customers across the region.
Shareholder Exit and Future Prospects
The decision to offer $12 million in cash to Adumo’s indirect shareholders reflects a pragmatic approach to dealing with differing investment mandates. Some shareholders were unable to hold Lesaka shares due to restrictions in their investment strategies, prompting the cash payout. This exit option, expected to be completed in early October 2024, provides liquidity to those investors while allowing Lesaka to maintain its financial flexibility.
Lesaka’s Head of Corporate Development, Steve Heilbron, highlighted the significance of the acquisition for both companies. “This is a landmark transaction for Lesaka, materially broadening our product offering and deepening our penetration in both the consumer and merchant segments,” he said. “We believe the scale and solutions offered by the combined business will accelerate growth and innovation, and we look forward to integrating the two teams.”
With Adumo’s integration into the broader Lesaka platform, the combined entity is well-positioned to take advantage of new market opportunities across Southern Africa. In addition to the expanded customer base and product suite, Lesaka will benefit from Adumo’s established presence in key markets, including South Africa, Namibia, Botswana, and Kenya, while also gaining access to corporate clients such as Anglo American and Coca-Cola.
As the fintech landscape in Southern Africa continues to evolve, the acquisition of Adumo by Lesaka underscores the growing importance of scale and technological capability in driving success. With Adumo’s established presence and Lesaka’s ambition to become the region’s leading fintech consolidator, the deal represents a significant step forward for both companies. For Adumo’s shareholders, the $12 million cash exit provides a timely opportunity to capitalize on the success of the business, while the integration of the two companies sets the stage for future growth in a rapidly digitizing economy.