Visa is to spend hundreds of millions of dollars to acquire a stake in Interswitch, an African payments group, in a deal that will see it becoming the continent’s latest technology ‘unicorn’.
Sky News has learnt that Visa and Interswitch are in advanced talks about a transaction that could be announced as soon as this week.
Sources said on Sunday that the US-based multinational would invest $200m in Interswitch in return for a 20% stake.
The deal will see Visa becoming a cornerstone investor in the Nigerian-headquartered company ahead of a prospective initial public offering in London during the first half of 2020.
Interswitch is one of the largest Africa-focused electronic payments and infrastructure companies, with point-of-sale terminals, online consumer payment platforms and its own card, Verve.
The latter is the biggest domestic debit card scheme in Africa, with more than 19 million cards active on its network.
An investment by Visa will facilitate the formation of a strategic partnership to target the fast-growing African digital payment market.
It will come months after its global rival, Mastercard, invested $300m in Dubai-based Network International ahead of its stock market debut in London.
Network International, which is the largest payment processor in Africa and the Middle East, has since seen its shares perform strongly, bucking the trend of a stagnant environment for London IPOs.
The rush to build stakes in African businesses by Visa and Mastercard is being driven by a desire to take advantage of established platforms in markets that are both fast-growing and under-penetrated.
Unlike many fintech groups, Interswitch is both profitable and generating significant levels of cash.
The two dozen countries it serves include some of the most populous in the world, including Nigeria, which is home to nearly 200 million people.
Founded in 2002 by Mitchell Elegbe, an entrepreneur, Interswitch appointed Sir Kenneth Olisa, a prominent corporate governance stalwart, as its chairman in 2017.
Sir Kenneth, a former deputy chair of the Institute of Directors, once memorably described the Kazakh mining company ENRC – on whose board he had served as “more Soviet than City”.
An eventual IPO for Interswitch would allow the company’s majority shareholder, Helios Investment Partners, to begin selling down its stake if it chooses to do so.
Helios has already floated a separate namesake business, Helios Towers, in London in recent weeks.
JP Morgan is leading the syndicate of investment bankers which have been hired to work on Interswitch’s eventual flotation.
A previous plan to take Interswitch public stalled in 2016 amid a contraction in Nigeria’s economy.
Interswitch declined to comment, while Visa could not be reached for comment.