Net1 receives competition law approval in respect of the Connect Group transaction
“We welcome the decision by the competition authorities in approving the acquisition by Net1 of the
“The approval by the competition authorities is an important milestone towards closing the transaction. We believe the combined
Conditions to the transaction imposed by the South African competition authorities
Further to increasing the spread of ownership by HDPs: Net1 is required to establish an employee share ownership scheme (“ESOP”) that complies with certain design principles for the benefit of the workers of the merged entity to receive a shareholding in Net1 equal in value to at least 3% of the issued shares in Net1. If within 24 months of the implementation date of the transaction, Net1 generates a positive net profit for 3 consecutive quarters, the ESOP shall increase to 5% of the issued shares in Net1. The final structure of the ESOP is contingent on Net1 shareholder approval and relevant regulatory and governance approvals.
Outstanding conditions precedent to the transaction agreement
The following conditions precedent for the transaction remain outstanding, and are expected to be fulfilled by the end of
- Net1 has confirmed that the facility agreements for the funding of a portion of the consideration for the acquisition
Connect Grouphave become unconditional, including the fulfilment of the conditions precedent which are under Net1's sole control.
- The counterparties to designated agreements have consented to the change of control over the companies in the
Connect Groupthat will result from the implementation of the acquisition of the Connect Group.
Net1 has previously communicated its vision to transform into the leading fintech platform for underserved consumers and merchants in
The combination of Net1 and the
- Combining complementary product offerings to drive stronger unit economics: the
Connect Groupfills four key gaps in Net1’s product offering, namely the provision of value-added services directly to MSME’s, digitized cash management, merchant acquiring and merchant lending. On the other hand, Net1 brings issuing, insurance, and consumer financial services infrastructure to the Connect Group. Offering multiple products to a single customer reduces churn, increases take-rate, and improves unit economics.
- Expansion of addressable market in informal MSMEs: while Net1 has an established presence amongst formal enterprises, it does not currently serve any of South Africa’s estimated 1.4 million informal MSMEs.
Connect Groupserves over 35,000 informal MSMEs and is a leading provider of financial services to this growing customer segment.
- Attractive financial profile with strong and profitable growth: the
Connect Grouphas delivered exceptional historical growth in throughput, revenue, earnings, and free cash flow. Further, there is significant room for continued growth, supported by secular tailwinds.
- Merging highly skilled teams with complementary expertise: the
Connect Grouphas a proven track record of successfully launching and commercializing innovative financial solutions and a demonstrated ability to successfully integrate with new operating groups.
- Better serving the underserved: Net1 and the
Connect Groupare united by their commitment to provide dignified financial services to people and businesses who are underserved by the financial system. Net1’s base of more than one million retail customers and the Connect Group’s base of over 44,000 MSME customers are underserved by traditional financial services.
Founded in 2006, the
Net1 is a leading financial technology company that utilizes its proprietary banking and payment technology to deliver on its mission of financial inclusion through the distribution of low-cost financial and value-added services to underserved consumers and merchants in
Net1 has a primary listing on NASDAQ (NasdaqGS: UEPS) and a secondary listing on the
This announcement contains forward-looking statements that involve known and unknown risks and uncertainties. A discussion of various factors that may cause actual results, levels of activity, performance or achievements to differ materially from those expressed in such forward-looking statements are included in our filings with the
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Source: Net 1 UEPS Technologies, Inc.