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Absa Says African FinTechs Should List IPOs on Local Exchanges

South Africa flag and stock chart

South Africa’s Absa Group has reportedly highlighted the opportunity for African FinTechs to consider public listings at home.

Adesoji Solanke, head of FinTech investment banking origination at Absa Securities UK, emphasized the potential for FinTech startups on the continent to raise capital through initial public offerings (IPOs) on local exchanges, Bloomberg reported Thursday (Feb. 22).

Amid a global slump in venture capital funding, listing on a local exchange could serve as an exit strategy for FinTech shareholders, especially those with significant revenue in a single local currency, according to the report.

Solanke pointed out that there are sizable pension pools for investing in some African countries, making local listings a viable option, per the report. In addition, Africa’s rapidly growing population, particularly tech-savvy youth, has led to the emergence of a vibrant FinTech industry.

Companies like Flutterwave, Chipper Cash and Interswitch have hinted at possible listings in the United Kingdom or the United States, the report said. However, listing locally can offer advantages such as familiarity with local investors and less stringent listing requirements.

Several African FinTech companies, including E-Finance for Digital & Financial Investments, Fawry for Banking & Payment Technology Services, e-Tranzact International and Lesaka Technologies, have already listed on local exchanges, according to the report.

Solanke noted that African FinTech firms with geographically diversified revenues and strong growth potential could also consider international listings, per the report.

Major mobile phone companies in Africa, like MTN Group, Vodacom Group and Airtel Africa, have significant FinTech units that could potentially go public, the report said. MTN sold a stake in its FinTech to Mastercard last year, valuing the business at $5.2 billion. Airtel’s mobile money unit was valued at $2.7 billion in 2021.

Exchanges in Nigeria and Kenya are addressing concerns related to listing and foreign currency preferences of private equity and venture capital firms, per the report. Solanke mentioned collaboration with institutional investors to educate them about investing in African tech companies.

In another recent development in this space, Visa said in January that it is accepting applications for the second cohort for its Africa FinTech Accelerator program until Feb. 29.

This program aims to provide mentorship, training and networking opportunities to Series A startups operating in Africa.