South African fintech group Adumo have announced R225 million ($15 million) in new funding from IFC, a member of the World Bank Group, and the IFC Financial Institutions Growth Fund to expand access to electronic payment solutions, especially for underserved small and medium-sized businesses.
IFC’s investments will support Adumo to make digital payments systems more affordable and accessible to smaller businesses in Africa, many of which currently rely on cash transactions. Adumo, South Africa’s largest independent payment provider with a presence in 14 African countries, owns merchant acquirers Sureswipe and Ikhokha and payment processor Innervation Pan African Payments.
“The pandemic and associated impact on consumers and businesses are transforming the face of the payments industry with interest in cashless payment services at an all-time high. The funds we have raised from our new equity partners will help us roll out new payment innovations and purpose-based lending services to support consumers and retailers as they navigate an uncertain 2021,” said Paul Kent, CEO at Adumo.
The investment by IFC and the IFC Financial Institutions Growth Fund, a fund managed by IFC’s Asset Management Company, consists of $15 million in preferred shares to fund the growth of the company.
“Through this investment in Adumo, we will be helping small businesses tap into the digital economy, which is more important now than ever before. Digital payments are often the first step for a small business to build a credit history, which opens the way to access further financial services such as financing to grow the business,” said Sérgio Pimenta, IFC’s Vice President for the Middle East and Africa.
Supporting small businesses to access finance and financial services affordably and sustainably is a priority for IFC because of their potential to not only grow the economy but also create jobs. IFC combines investments and advisory services to help financial intermediaries reach more small businesses in South Africa and other emerging markets.
In South Africa, micro, small and medium-sized enterprises employ over 50 percent of the work force and contribute around 34 percent of GDP, but many don’t have access to key services that would help their business grow. Digital and mobile payment solutions can help businesses increase footfall and improve customer retention by supporting the transition away from cash-based transactions.
Adumo, previously known as Crossfin Transactional Solutions, processes more than $5 billion in transactions annually through more than 30,000 active clients and across 50,000 active card machines.
In 2018, Apis Growth Fund I, a private equity fund managed by UK based financial services asset manager, Apis Partners LLP, invested growth capital in Adumo. Matteo Stefanel, Managing Partner at Apis Partners LLP, said, “Our investment in Adumo was a testament to the organisation’s potential to grow into a market leader through a combination of organic and inorganic growth. We are delighted to see Adumo’s continued success be recognised by a leading global institution like the IFC.”
Udayan Goyal, Managing Partner at Apis Partners LLP, added: “Our thesis around building the leading diversified non-bank payments company in South Africa has been validated by this investment by the IFC. We are confident that the IFC investment will be an important contribution to further accelerate the company’s growth in order to consolidate its already strong market position.”