Nigerian FinTech Deal Sets New Standard

It has been described as the ‘biggest start-up acquisition to come out of Nigeria’ and is expected to dramatically boost Paystack’s presence across the continent.

Shola Akinlade and Ezra Olubi, the co-founders of Paystack, started the company in 2015 and deliberate steps, including building a merchant-base consisting of more than 60,000 SMEs, corporates, fintechs, educational institutions and more, has led them to this huge win.

Paystack allows its users to set up online payment gateways to enable their businesses to accept payments from customers. In 2016, the company became the first Nigerian startup ever admitted into Y Combinator – the Silicon Valley incubator that has backed several major global startups.

Babajimi Ayorinde, a founding partner at The New Practice (TNP), the commercial law firm that advised Paystack on this deal, said the deal cemented Nigeria's position as an incubator for African fintech talent.

“It is gratifying to note that Paystack’s co-founders were both born, raised and studied entirely in Nigeria. They are proof that talented young Nigerians are able to build scalable tech businesses if given the opportunity and resources.”

“The deal recognises the potential for growth in the Nigerian fintech industry. A significant portion of Nigerians are still financially excluded.

“SMEs, even when financially included, usually lack access to facilities that enable them to make digital payments. While some see this as a problem others, like Paystack and Stripe, see an investment opportunity.”

Ayorinde said more foreign investment was now expected for the African fintech industry.

“It is my hope that African regulators create an investment climate and regulatory environment that is more predictable, transparent and enables fintech to flourish.”

For this deal, which was a cross-border transaction, he said TNP’s primary role was to ensure that the transaction structure, documentation, implementation and regulatory aspects all complied with Nigerian law.

In an interview with CNBC’s Closing Bell West Africa, Shola Akinlade shared snippets of Paystack’s journey and his hopes of what is to come.

“There are multiple parts to the Paystack/Stripe deal. Firstly, there is our story – which is proof that Nigerians and Africans are doing things. “It shows that you can build something valuable, it can work and people will appreciate it. Paystack has grown in the last five years with immense support from local investors who believed in us.

“Secondly, these same local investors are now able to fund more companies. Foreign investors will also evidently see the opportunities in Nigeria and should be ready to take the leap.

“Thirdly, we at Paystack are building tools - like our recently launched product Paystack Commerce - to help people scale their businesses and reach more customers.

He said Paystack remained focused on facilitating easier ways of payment across the continent.

“As we begin our expansion, it means that our merchants’ businesses can also expand to every country which we operate in.”

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