South African fintech investment firm Crossfin Technology Holdings has been acquired by a consortium of investors in a ZAR1.5 billion (US$93 million) deal the company says will allow it to pursue the next phase of its growth.
Crossfin is a leading independent fintech platform operating predominantly in South Africa with a particular focus on payments technologies and smart funding. The firm operates a differentiated business model based on investing and supporting an ecosystem of synergetic and complementary fintech businesses at different stages of maturity.
The company has three main pillars – payments technologies, the main investment in this segment being Adumo; smart funding, the main investment being Retail Capital; and VC, with Crossfin Ventures allowing the company to gain early-stage exposure to emerging trends in the fintech industry.
This business model has allowed Crossfin to consistently achieve robust top line and earnings growth, and a top quartile Gross Internal Rate of Return to shareholders despite very limited access to capital to support growth. That capital has now been secured after the firm was acquired by a consortium led by Ethos’ Mid-Market Fund I (EMMF I) that also includes the founding Crossfin executive management team, EMMF I co-investors Ethos Artificial Intelligence Fund I and leading empowerment investor African Rainbow Capital.
The transaction is one of the largest private equity-led investments in the fintech sector in South Africa to date, and includes the acquisition of the current business as well as the provision of acquisition and growth capital to enable Crossfin to invest organically as well as to pursue new opportunities across South Africa and the rest of Africa.
“The transaction represents a new phase of growth and maturation for Crossfin. With additional growth capital invested in the business, we are advancing our vision of building and investing in great fintech businesses growing a compelling and mutually beneficial fintech ecosystem to enable growth and efficiencies for economies in Africa and beyond,” said Crossfin chief executive officer (CEO) Dean Sparrow and CXO Anton Gaylard.
“We believe that this is an exciting opportunity underpinned by strong tailwinds in a cutting-edge industry. Crossfin is ideally positioned to continue capturing the payments technology and the broader fintech opportunity both existing and emerging. The transaction is an exceptional opportunity to acquire a group with significant value creation momentum. We are proud to partner with Dean, Anton and the broader Crossfin team, they have done a phenomenal job of growing the business and we look forward to partnering with them through the next phase of their growth,” said Edward Pitsi, managing partner at Ethos Mid Market Fund I.