Nigerian fintech firm Interswitch has been circulating in the business news surrounding a possible IPO on the London Stock Exchange.
Last month, Bloomberg News ran a story, based on unidentified sources, reporting that the financial services firm had hired investment banks to go public on the LSE later in 2019. The piece spurred additional aggregate press.
That Interswitch, which provides much of Nigeria’s digital banking infrastructure, could become one of the first African tech companies to go public on a global exchange isn’t exactly news.
It’s more deja vu from a story that began several years ago.
As TechCrunch reported, Interswitch was set to launch on the LSE in 2016. CEO and founder Mitchell Elegbe confirmed that “a dual listing on the London and Lagos Stock Exchange is an option on the table,” in a January 2016 call.
Two additional sources connected to the Nigerian tech market and close to Interswitch investors also said that the public launch would occur later that year.
The IPO would have seen Interswitch Africa’s first tech company go from its inception to a unicorn valuation status of more than $ 1 billion. Of course, it didn’t happen in 2016.
In 2017, TechCrunch checked in with Interswitch about the delay and was told that the company could not comment on its pending IPO. In other public interviews, Executives Mitchell Elegbe and Division Chief Executive Akeem Lawal cited Nigeria’s recession as a reason for the delay and reaffirmed a likely Longon-Lagos dual list by the end of 2019.
After the latest round of IPO rumors, TechCrunch asked Interswitch this week about the Bloomberg reports and an impending public action list. “” Interswitch no commentary on market speculation “was the only information a public spokesperson could offer.
Therefore, it is difficult to say if or when the company could go public. There are still a few reasons why the company (and its possible IPO) is worth keeping an eye on.
One is Interswitch’s growing role as a nexus for financial services and payments infrastructure in Nigeria (home to Africa’s largest economy), in Africa, and between Africa and the world. In 2002, the company pioneered the creation of infrastructure to digitize Nigeria’s predominantly cash and ledger-based economy.
Since then, Interswitch has moved into high-volume personal and business finance, with its Verve payment cards and Quickteller payment app. The Nigerian company (which is now beyond the startup phase) has expanded with a physical presence in Uganda, the Gambia and Kenya, the latter being home to M-Pesa and Safaricom, which are largely responsible for making Kenya the mobile money capital of Africa
Interswitch also sells its products in 23 African countries, through banking associations, and has a presence abroad. Through your Verve Global Card product, company cardholders are now able to make payments in the US, UK, and UAE. Interswitch launched a partnership this month for Verve cardholders to make payments on the Discover global network. The first transaction for the association took place in New York, with an advertisement for the Nigerian company’s paid product in Times Square.
Another facet of a potential Interswitch IPO is its potential to generate more acquisition activity and corporate risk arm in African fintech, which as a sector receives most of the continent’s seed capital. Interswitch launched a venture arm in 2015–called its Global Electronic Payment Growth Fund–that made two reversals, but then largely calmed down.
A capital windfall from IPO and increasing competition from fintech startups could propel Interswitch to boost its venture investing activity again. Startups like Flutterwave and TeamAPT (formed by a former Interswitch alumnus) have already entered part of Interswitch’s product territory. If a public listing led Interswitch to increase investment in (or even acquire) startups, the net effect would be more capital and exits in Africa’s fintech sector.
And finally, if Interswitch does an IPO on the London and Lagos stock exchanges, it could provide another benchmark for global investors to assess Africa’s tech sector beyond Jumia. This spring, the e-commerce company became the first major technology company operating in Africa to launch on a major exchange, the NYSE.
So far, Jumia’s IPO has been a checkered affair. The company gained confidence from investors and analysts early on, but it also suffered from a short sale attack and share price volatility.
Two successful global IPOs of tech companies from Africa would turn out and could become the best stage for the continent’s startup scene. But for that to be a possibility, Interswitch will have to confirm the speculation and eventually appear as a publicly traded fintech company.