Well-known South African bank sold for R1.1 billion

Still subject to regulatory approval, the deal will see Lesaka acquire 100% of Bank Zero’s issued ordinary shares. The transaction is structured as a mix of newly issued Lesaka shares and up to R91 million in cash. 

Once completed, Bank Zero’s shareholders will own about 12% of Lesaka’s fully diluted shares. Leseka said that the transaction represents a significant milestone in its growth trajectory.

With the addition of Bank Zero’s digital banking infrastructure and operational license, Lesaka said the acquisition is expected to unlock new revenue streams, improve capital efficiency, and reduce gross debt by more than R1 billion.

Executive chairman of Lesaka, Ali Mazanderani, described the acquisition as a game-changer for the company.

“The acquisition of Bank Zero is a transformative event in Lesaka’s journey, enabling us to better serve our consumers, merchants, and enterprise clients,” he said. 

“This is because we are embedding a trusted, well-engineered neobank capability into our fintech platform. I am delighted to welcome the Bank Zero team to Lesaka as partners.”

Founded in 2018 by banking veterans Michael Jordaan and Yatin Narsai, Bank Zero launched to the public in 2021. 

It is 45% black-owned and 20% women-owned and operates entirely digitally, offering retail and business banking through a mobile app. 

The bank runs on IBM Z mainframes and LinuxONE technology, which provides robust cybersecurity features, including protection against data breaches through IBM’s Secure Service Container.

Bank Zero’s client base includes higher-value customer segments such as digitally savvy users, businesses, and high-income earners.

The bank’s patented, fraud-resistant bank card helped attract clients looking for secure, low-cost banking solutions.

Bank Zero currently holds deposits exceeding R400 million across more than 40,000 funded accounts, with card spending reaching R415 million in 2024. 

The bank said it is tracking ahead of its original targets, with break-even expected by 2027, though it’s aiming to reach that point even sooner. 

Year-on-year growth in card purchases and electronic fund transfers has surpassed 50%, suggesting strong momentum going into the merger.

Michael Jordaan, who will remain chairman of Bank Zero and join the Lesaka board after the acquisition, said the deal is built on long-term strategic alignment.

“This transaction reflects a strategic partnership underpinned by long-term alignment, which will result in the continued involvement of all Bank Zero founders and management,” he said.

“Our belief in the combined platform’s future is clear, and we see strong symmetry in our vision.”

He added that there is a strong international precedent for fintech companies that have acquired banking capabilities to deliver more integrated, compliant, and capital-efficient financial services.

Bank Zero CEO Yatin Narsai will continue to lead the bank under Lesaka ownership. He said the merger allows both companies to scale their impact.

“Bank Zero was built from the ground up to deliver a secure, digital-first banking experience that puts control back in the hands of customers,” he said.  

“Our focus has always been on using technology to remove friction, lower costs, and challenge legacy banking norms.” 

Lesaka Technologies, formerly known as Net1, is a South African fintech company listed on the Nasdaq and JSE. 

Founded by Serge Belamant, it initially managed the social grant payment system in South Africa and Botswana until 2018. 

After a strategic overhaul initiated by Value Capital Partners in 2020, the company rebranded and began an aggressive acquisition drive. 

This included the R3.7 billion purchase of the Connect Group in 2022, the acquisition of Touchsides, and the $85 million deal to buy Cape Town-based payment platform Adumo in 2024.

Lesaka said acquiring Bank Zero will allow it to offer a full suite of banking services and finance.

It will also help its lending activities through customer deposits rather than bank debt, significantly improving its lending economics and capital structure. 

The company also expects the deal to be accretive to shareholders, with Bank Zero forecasted to be profitable within the fiscal year following the transaction’s close.

With regulatory approval still pending from bodies including the South African Reserve Bank’s Prudential Authority, the Competition Commission, and Exchange Control authorities, the transaction is expected to close later in 2025. 

Lesaka will provide further financial details when it releases its results for the year ending June 30, which is expected in early September.

Issued on BusinessTech by Malcolm Libera | https://businesstech.co.za/news/banking/829678/well-known-south-african-bank-sold-for-r1-1-billion/