Big plans for well-known South African bank being sold for R1.1 billion

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

Listed on the JSE and Nasdaq, Lesaka offers payment services to clients, with its brands including Kazang, Adumo, EasyPay and more. 

While still subject to regulatory approval, the deal will see Lesaka acquire 100% of Bank Zero’s issued ordinary shares.

The transaction is structured to contain primarily a host of newly issued Lesaka shares and up to R91 million in cash. 

Bank Zero’s shareholders will then own about 12% of Lesaka’s fully diluted shares.

As per the proposed deal, Jordaan will join the Lesaka board, while Narsai joins the executive leadership team. 

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

Its client base primarily 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 seeking secure, low-cost banking solutions. The bank has not seen any card fraud across its customer base.  

Bank Zero’s deposits exceed  R400 million across over 40,000 funded accounts, and card spending reached R415 million in 2024. 

The bank is beating its original targets, with break-even expected by 2027, but this could be achieved sooner. 

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

Why Lesaka wanted the deal 

Speaking at the group’s financial results presentation, Lesaka Executive Chairman Ali Mazanderani said that there is no more efficient banking operation in South Africa than Bank Zero, with further growth possible. 

For Lesaka, Mazanderani said that the deal will help with its product team, as it will reduce third-party dependencies, improve responsiveness to clients, increase availability and expand the range of customers it can address. 

When it comes to costs, the group has expenses associated with bank sponsorships, as well as other direct fees and foregone interest. 

Although the group intends to keep its third-party relationships to ensure an efficient payment ecosystem, dependencies will be reduced via the acquisition, while optionality is increased.

The group will also be able to expand its product offering by cross-selling to merchants, as well as enterprise customers. 

Bank Zero is also in the process of applying for an FX licence, which will give the group cross-border opportunities. 

Should the deal be approved, the group will be able to reduce its gross debt by around R1 billion by holding a large part of the consumer and merchant book in the bank. 

There will also be greater flexibility in expanding the book at a lower cost, as the group builds customer deposits.

For Bank Zero, the deal presents the opportunity to expand its organic growth by leveraging Lesaka’s distribution network.  

The companies will also be able to consolidate digital infrastructure into one scalable technology stack.

Issued on BusinessTech by Luke Fraser | https://businesstech.co.za/news/banking/837439/big-plans-for-well-known-south-african-bank-being-sold-for-r1-1-billion/