Lesaka Technologies, Inc, formerly known as Net1 UEPS Technologies, and listed on the Johannesburg Stock Exchange and the Nasdaq has acquired  payments services provider Adumo in a $85.9 million deal.

 The purchase consideration will be settled through the combination of an issuance of 17,279,803 shares of Lesaka common stock to Adumo’s current ultimate shareholders plus $12.5 million in cash, funded by internal cash resources and external financing.

Commenting on the transaction, Lincoln Mali, CEO of Lesaka Southern Africa, said: “We are thrilled to welcome the Adumo team into the Group and Adumo CEO Paul Kent onto our executive leadership team. Adumo’s customer base provides us access to more than 245,000 consumers and to payment technologies that we can incorporate into our existing operations. The pending acquisition of Adumo is another significant milestone for Lesaka as we build the top fintech platform in Southern Africa.”

Adumo’s ultimate shareholders include Apis Growth Fund I, a private equity fund managed by Apis Partners LLP (“Apis”), African Rainbow Capital (“ARC”), the largest shareholder of Crossfin Holdings (RF) Pty Ltd (“Crossfin”), as well as the International Finance Corporation and Adumo management.

The acquisition will enable Lesaka to  serve 1.7 million active consumers, 119,000 merchants, and process over ZAR 250 billion in throughput (ZAR 40 billion card, ZAR 100 billion VAS and ZAR 110 billion cash) per year.

The Group will have over 3,300 employees operating on the ground in 5 countries: South Africa, Namibia, Botswana, Zambia, and Kenya.

The acquisition reinforces Lesaka’s position as natural consolidator of Southern African Fintech and will enhance our strengths in both the consumer and merchant markets and follows the successful integration of the Connect and Kazang businesses and the recent acquisition of Touchsides.

Adumo serves approximately 23,000 active merchants. Its primary operations include card acquiring, integrated payments and reconciliation services processing more than ZAR 24 billion ($1.3 billion) in throughput per year. The company’s corporate card services cover over 245,000 card holders supporting payroll, incentives, rewards, and expense management. Adumo ISV, also known as GAAP, is the largest POS and Software-as-a-Service solutions provider to the hospitality sector in Southern Africa.

Adumo Co- Founder and Chief Executive Paul Kent expressed his excitement about the partnership: “We look forward to joining forces with the Lesaka team and contributing to the continued success of the Lesaka story. Our combined offering will significantly enhance the customer value proposition, and it is a natural fit considering our respective strengths and technology offerings.”

The transaction is expected to close in the third calendar quarter of 2024 and is subject to shareholder and regulatory approvals and satisfaction of customary closing conditions.

The number of shares to be issued was calculated based on the Base Purchase Consideration, which is defined in the Sale Agreement as an amount of ZAR 1.59 billion ($85.9 million), less the ZAR 232 million ($12.5 million) cash payment, implying a value per share of $4.25 ((ZAR 1.59 billion – ZAR 0.232 billion)/ 17,279,803). $1: ZAR 18.50.

Based on the 3 month and 6 month volume weighted average price per Lesaka share (“VWAP”) to 5 May 2024, using an exchange rate of ZAR 18.50 to $1, this implies a premium of 11% and 16% respectively.