Crossfin Technology Holdings, a South African fintech investment business, has been bought by a consortium of investors in a ZAR 1.5 billion (US $93 million) deal, which the company claims would enable it to pursue the next stage of its expansion.
Crossfin is a major independent fintech platform based in South Africa that specialises in payments and smart finance. The company has a unique business model that involves investing in and supporting a network of synergistic and complementary fintech companies at various stages of development.
The firm is built on three key pillars: payments technology, with Adumo as the primary investor; smart funding, with Retail Capital as the primary investor; and venture capital, with Crossfin Ventures providing early-stage exposure to future fintech trends.
Despite having extremely limited access to capital to fund expansion, Crossfin has continuously achieved substantial top line and profits growth, as well as a top quartile Gross Internal Rate of Return to shareholders, thanks to this business model. The company was bought by a consortium led by Ethos’ Mid-Market Fund I (EMMF I), which included the founding Crossfin senior management team, EMMF I co-investors Ethos Artificial Intelligence Fund I, and premier empowerment investor African Rainbow Capital.
The deal is one of the largest private equity-led fintech investments in South Africa to date, and it includes the acquisition of the current business as well as the provision of acquisition and growth capital to allow Crossfin to invest organically as well as pursue new opportunities across South Africa and 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.
