Capitec buys South African fintech for R400 million

Capitec has announced plans to buy South African fintech Walletdoc in a deal worth R400 million.

This deal includes a purchase price of R300 million and a deferred earn-out of R100 million linked to the Capitec share price and based on the achievement of certain milestones over the next three years.

On Monday, 8 December, Capitec informed shareholders that it has entered into a binding agreement to buy Walletdoc Holdings.

Established in 2015, Walletdoc is a South African fintech providing scalable, innovative payment gateway solutions for merchants.

This includes online and in-app payments, digital wallets, Instant EFT, payment links, and real-time payouts. 

“Walletdoc’s culture of innovation, efficiency, and client focus is closely aligned with Capitec’s core values,” the banking giant said.

“This acquisition is a strategic step in Capitec’s ongoing commitment to lower the cost of payments, broaden access to digital financial services, and promote financial inclusion in South Africa.”

“Capitec believes in the power of innovative technology to deliver smart, seamless payment solutions that benefit both merchants and consumers.” 

“We are committed to making financial services more accessible and affordable for all South Africans, and we see this acquisition as an important step in building a more inclusive and competitive payments ecosystem.”

The purchase consideration comprises a cash payment of R300 million and a deferred earn-out of R100 million.

The earn-out is linked to the Capitec share price and payable in cash over three years, subject to the achievement of certain milestones over that period.

This acquisition comes as Capitec is looking to dominate business banking in South Africa, particularly for small, medium and micro enterprises.

The bank’s enterprise business will play a large role in this plan, with CEO Graham Lee calling it one of the most important parts of Capitec’s business for the future.

Enterprise Payments is the division within Capitec that houses all of its segments that help other businesses accept payments, including debit order collection, merchant services, and e-commerce.

This has become an increasingly competitive space in recent years, with not only large players like Standard Bank and FirstRand’s FNB fighting for market share but also new, smaller entrants like fintech Yoco.

The enterprise payments business has become particularly attractive not only to established financial services players, such as banks, but also to smaller fintechs, which have seen significant success in this market.

Businesses like Yoco and iKhokha have become household names by offering payment services to historically underserved segments of the market, such as small, medium, and micro enterprises.