Interswitch Fund Raise Reduce Largest Shareholder’s Stake, Risk –Moody’s
The largest shareholder’s interest in Interswitch has reduced as the Nigerian payment company raised new capital from a primary share issuance, according to Moody’s issuer comment.
MarketForces Africa reported that the payment company raised $110 million in joint investment from LeapFrog investments and Tiana Africa Capital recently to scale digital payment services across the continent.
In a commentary note, Moody’s said the strategic investment provided the company with a fresh capital, benefiting its solvency and reducing shareholder concentration risk.
The global rating agency said in a report that Interswitch is faced with rising industry risks due to evolving regulations in the financial services and payment processing service sectors, the rating agency’s expectations of higher level of competition and the industry’s continuous technological changes.
The broader payments industry remains susceptible to heightened event risks, which exposes the industry players to operational, regulatory, technological and cyber risks, ultimately translating into potential financial losses, according to Moody’s.
“Competition will increase as both new fintech companies and some of Nigeria’s leading banking groups are also investing in their own capabilities to handle and process electronic transactions and payments”.
However, it said there are concerns around corporate behaviour, risk management and the limited financial and operational information that is available in the public domain.
Interswitch’s last funding round was in 2019 when VISA acquired a 20% stake, valued at $200 million, and helped it become Africa’s second unicorn. READ: Interswitch Raises $110 Mln to Expand Digital Payments
At $1 billion market valuation, Interswitch is touted as one of Africa’s biggest electronic payments and infrastructure companies that operate from the base.
“The evolution of fintech in Nigeria and the broader sub-Saharan region has been driven by the need to solve challenges and barriers that exist within the traditional financial system,” Interswitch Group CEO Mitchell Elegbe said in a statement.
“Interswitch was born from the need to develop solutions that match the unique needs of local customers and merchants”, he added. # Interswitch Fund Raise Reduce Largest Shareholder’s Stake, Risk –Moody’s
