Lesaka Technologies says it’s on the hunt for acquisitions
Lesaka Technologies, which closed a deal to buy data analytics and merchant services company Touchsides from Heineken this week, says it is on the hunt for acquisitions, particularly in the merchant business.
Lesaka provides informal retail merchants with point-ofsales devices with which they can pay their suppliers and sell many products, including airtime and electricity. It has a primary listing on the Nasdaq and a secondary one on the JSE.
“M&A [mergers and acquisitions] is an important aspect of building and scaling our business,” outgoing CEO Chris Meyer said during an investor presentation on Wednesday.
“We look at ... broadly two buckets. One is around adding scale and the other is around adding to our proposition for our customer base and largely we see it in the merchant space. The Touchsides acquisition falls into the latter; it’s about broadening our proposition. You should expect to see more activity around those buckets. We ’ re actively looking and evaluating [deals] against our criteria.”
Lesaka, valued at $230.2m (R4.347bn) on the Nasdaq and JSE, acquired Touchsides from Heineken SA for an undisclosed sum. The acquisition is expected to boost the group’s Kazang footprint in the tavern industry in SA’s informal market. Kazang is a payments platform that includes buying and selling of airtime and micro-lending.
This adds to the buyout of the Connect Group in April 2022 through a R3.7bn deal that is set to expand its footprint in the small, medium and micro enterprises (SMME) sector in Southern Africa.
This comes as the technology and financial services group narrowed its net loss 57% in the December, quarter boosted in part by its fintech business.
More than 72,000 informal retail merchants use its cash management solutions, bill payment technologies, value-added services, business funding and card acquiring solutions.
The group also provides unsecured credit, transactional banking and microinsurance to customers through its EasyPay Group revenue rose 13% to R2.7bn year on year, driven by an increase in low-margin prepaid airtime sales and other value-added services, as well as higher revenue from transactions, insurance and lending.
Its operating income was R42.5m during the review quarter, swinging from an operating loss of R38.4m reported in the comparative period a year ago. However, its net loss narrowed to R50.8m versus R116.5m.
“We have once again achieved excellent results this quarter. Our consumer team’s hard work over the past two years is paying off, resulting in substantial customer and profit growth,” said Meyer.
“Our merchant division has also performed well, and our acquisition of Touchsides has given us new technology and expertise in the tavern vertical, allowing us to continue innovating in this competitive market.”
The company also benefited from a higher interest-rate environment in SA. However, the weaker rand against the dollar affected translated earnings.
For the March quarter, Lesaka projects revenue growth of R2.7bn-R2.78bn, while adjusted core profit is forecast at R170mR190m.
Lesaka’s share price, which is down 8.6% over the past year, gained 1.49% to R70 on the JSE on Wednesday.
OUR ACQUISITION OF TOUCHSIDES HAS GIVEN US NEW TECHNOLOGY AND EXPERTISE IN THE TAVERN VERTICAL