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Digital Currency Group acquires crypto exchange, Luno

DCG’s recent acquisition will be of significant financial commitment to support Luno expand worldwide.

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One of the leading blockchain companies, Digital Currency Group, or DCG, has recently acquired the British based crypto exchange, Luno.

DCG had initially bought a stake in Luno by investing in the exchange’s seed round in 2014. Since then, the exchange has spread its roots across 40 countries and currently boasts of more than five million registered users on its platform.

American based DCG will be making a significant financial commitment to support Luno expand worldwide including where Luno currently operates and beyond. Financial terms of the deal were however not disclosed.

DCG Founder and CEO Barry Silbert spoke on the recent deal. He said, “We are proud to have supported Luno as an early investor, and we recognize a shared commitment to building mission-driven companies that can help transform traditional financial services and improve economic freedom for people all over the world.”

“Luno is a high growth, global business and there is a massive opportunity to expand organically and through acquisitions,” he added.

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DCG stated that Luno will keep operating as an independent organization under the leadership of its CEO while DCG will provide leadership, partnership, and investment capital to help the exchange scale its business.

Luno has become a digital asset powerhouse in many emerging and frontier markets, providing digital asset education, knowledge, and investment tools for individuals in Africa, Asia, and Europe.

Luno has helped broaden the global crypto investment community and the company has seen record growth of its customer base in 2020.

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In Africa, the company saw more than 550,000 new users on its platform in Q2 2020 and contributes the largest share of cryptocurrency trading volume on the continent across non-P2P exchanges.

Luno is a leading exchange in several countries that have the highest percentage of cryptocurrency ownership, including South Africa (third-highest of its citizens owning digital currencies), Nigeria (fifth-highest), Indonesia (sixth-highest), and Malaysia (tenth-highest)

Olumide Adesina is a France-born Nigerian. He is a Certified Investment Trader, with more than 15 years of working expertise in Investment Trading and Financial Market Analysis. Member of the Chartered Financial Analyst Society. You can follow Olumide on Twitter @tokunboadesina or email [email protected]

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Corporate deals

CAP Plc set to merge with Portland Paints and Products Plc.

CAP Plc and Portland Paints have taken a decision to merge their respective businesses in accordance with applicable laws.

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CAP Plc

The Board of Directors of Chemical and Allied Products Plc (CAP Plc), and Portland Paints and Products Plc (Portland Paints), have decided to merge their respective businesses in accordance with applicable laws to drive growth and expansion within the Nigerian and African markets.

This is according to a press release signed by Bolarin Okunowo, the Managing Director of Portland Paints, made available on NSE, Monday, 26th October 2020.

READ: Big players in Paints and Coatings industry suffer 52% profit loss in the first 6 months of 2020

The completion of the proposed merger is subject to approvals being obtained from the Federal Competition and Consumer Protection Commission, the Securities and Exchange Commission (SEC), The Nigerian Stock Exchange (NSE), the Federal High Court, as well as shareholders of CAP and Portland Paints.

READ: Meet the woman winning in a male-dominated paint market 

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What you should know

  • Should the proposed merger go ahead, CAP Plc will emerge as the resultant entity.
  • The proposed merger will be executed by way of a Scheme of Merger (the “Scheme”) in accordance with Section 711 of the Companies and Allied Matters Act, 2020, and other applicable laws, rules, and regulations.
  • The Scheme will involve the transfer of all Portland Paints Plc’s assets, liabilities and business undertakings including real property and intellectual property rights to CAP Plc.
  • In consideration for the transfer, CAP Plc is offering shareholders of Portland Paints a choice to receive N2.90 cash for every Portland Paints share held OR 1 new ordinary share of CAP Plc, credited as fully paid up for every 8 Portland Paints shares held.
  • The proposed consideration represents a 45% premium to the last traded share price of Portland Paints Plc on October 16, 2020, being the last business day prior to the date on which CAP Plc sent its merger proposal to the Board of Portland Paints and a 41% premium on the trading price as at close of trading on October 23, 2020.

READ: GNI lists shares on NASD after delisting voluntarily from NSE 

What they are saying

Commenting on the proposed merger, David Wright, Managing Director of CAP, said, “The decision to pursue the proposed merger, is driven by the Board’s strategic plan to aggressively grow within the Nigerian and African markets.

“We believe that the Proposed Merger presents a unique opportunity that will benefit all stakeholders, from shareholders to customers, as well as the broader economy. I am excited by the prospect of an enlarged company with a broader decorative paint portfolio covering the premium, mid-market and affordable segments and the inclusion of marine and protective coatings, all of which will benefit our customers and shareholders.”

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READ: Africa Prudential tops losers list following mark down

The Managing Director of Portland Paints, Bolarin Okunowo, submitted that “In recent months, the Board and Management of Portland Paints have evaluated various strategic options with a view to positioning our company to capture emerging growth opportunities.

“CAP Plc’s business is complementary to ours, and both companies will be better able to serve our respective customers by coming together. I believe the combination of Portland Paints and CAP will yield significant benefits for all of our stakeholders.”

Mutual shareholder

Portland Paints and Products Nigeria Plc – with 85.98% of the company’s issued share capital owned by UAC Nigeria Plc, manufactures and sells decorative, industrial, and marine/protective coatings for the construction of oil & gas industries in Nigeria. Portland Paints is the Nigerian representative of Hempel. It is listed on the NSE.

Chemical and Allied Products Plc (CAP) – a subsidiary of UAC Nigeria Plc – which holds 51.49% of the company’s shares, manufactures and sells premium and standard paints and coatings, and is the sole technological licensee of Akzo Nobel Coatings International B.V. in Nigeria. It is listed on the NSE.

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Corporate deals

Paystack acquired by Stripe for a reported $200 million in the biggest fintech acquisition in Nigeria’s history

Nigerian fintech startup, Paystack has been acquired by global fintech giant, Stripe.

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Paystack acquired by Stripe for a reported $200 million in the biggest fintech acquisition in Nigeria's history

PayStack, a Nigerian fintech startup, has been acquired by global fintech giant Stripe, in the biggest M&A deal in Nigerian tech and one of the biggest in Nigerian corporate history. Paystack was founded in 2016 by Ezra Olubi and Shola Akinlade.

This was disclosed in a press release seen by Nairametrics. The statement read in part:

“In order to help grow Africa’s online GDP, Stripe has entered into an agreement to acquire Paystack, a technology company based in Lagos that makes it easy for organizations of all sizes to collect payments from around the world.

READ: Nigerian Fintech Startup, Piggybank.ng, secures $1.1M Seed Funding

READ: How these healthcare startups are changing the narratives in the ecosystem

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“Today, more than 60,000 businesses in Nigeria and Ghana use Paystack to securely collect online and offline payments, launch new business models, and deepen customer relationships.

“Incredibly, Paystack already processes more than half of all online transactions in Nigeria.
Paystack has ambitious plans to expand across the continent and recently started a pilot with businesses in South Africa.

“Stripe and Paystack have been working closely together for some time. In 2018, Stripe led Paystack’s Series. A financing round and has provided ongoing guidance as the company rapidly scaled.”

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READ: FairMoney secures EUR 10 million seed funding, to widen mobile banking services in Nigeria 

Following the announcement, TechCrunch on Thursday afternoon reported that Stripe had raised $600 million to invest and acquire payments companies in developing nations. It disclosed that the Nigerian startup had been on Stripe’s bucket list for a while since 2018 when Stripe led an $8 million funding round for PayStack.

Paystack Co-founder Sola Akinlade told TechCrunch that the company was not up for sale when Stripe initially approached for the acquisition; however, the founders are mission-driven and believed Stripe could accelerate it. Akinlade also disclosed PayStack investors, VISA and Tencent also approached to acquire the company.

READ: 3 startup lessons from Kobo360’s $30 million fund raise

“Paystack was not for sale when Stripe approached us.

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“For us, it’s about the mission. I’m driven by the mission to accelerate payments on the continent, and I am convinced that Stripe will help us get there faster. It is a very natural move,” Akinlade said.

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READ: The “EndSARS” protests and the problem of police reform in Nigeria

Backstory

Nairametrics reported in 2016 when Paystack raised its initial $1.3 Million Seed Funding from both international and homegrown investors.

Founders Ezra Olubi and Shola Akinlade were the toast of the tech space when their company became the first Nigerian tech startup to be accepted into the world-famous Y Combinator program, based in Silicon Valley. They obtained an initial $120,000 seed funding and further technical advice at the program.

READ: #EndSARS: Nigerian firms, Start-ups donate millions in support of protests

READ: E-Settlement Partners Seriate for acquisition and deployment of 20,000 mPOS

What they are saying

Patrick Collison, CEO of Stripe, told TC that the deal with PayStack is an enormous opportunity, as African e-commerce grows by 30% every year, which would give Stripe an early footing in the region.

“This is an enormous opportunity,” he said.

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“In absolute numbers, Africa may be smaller right now than other regions, but online commerce will grow about 30% every year. And even with wider global declines, online shoppers are growing twice as fast.

READ: New report details how Nigerian fintech companies are expanding their business scopes

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“Stripe thinks on a longer time horizon than others, because we are an infrastructure company. We are thinking of what the world will look like in 2040-2050.”

He added that Stripe is also planning  on understanding the ecosystem and keep its eyes  open so it can see where help is needed, as the company does not tie up its investments into “complicated strategic investments.”

Collison said that many companies depend on Stripe’s infrastructure, but with PayStack, the founders have organic input in running their operations.

READ: Meet Sola Akinlade, co-founder of Nigeria’s foremost payment platform Paystack

READ: Paystack explains how it will use Truecaller to verify merchants

Stripe said the announcement of the acquisition was delayed due to the #EndSARS protests across the country.

“A lot of companies have been, let’s say, heavily influenced by Stripe.

“But with Paystack, clearly they’ve put a lot of original thinking into how to do things better. There are some details of Stripe that we consider mistakes, but we can see that Paystack ‘gets it’. It’s clear from the site and from the product sensibilities, and that has nothing to do with them being in Africa or African.”

READ: Nigerian fintech companies raised $600 million in five years – McKinsey Report 

Shola Akinlade said the payments ecosystem is still broken and PayStack is still in its early days. PayStack provides payments API for companies and takes a cut from every transaction. The company has 60,000 customers so far, from SMEs to large cooperation,s and would continue to run independently.

Techcrunch said the full terms of the deal were not disclosed. However, TC confirmed that it is worth over $200 million, making it the largest tech acquisition in Nigerian corporate history.

READ: CBN to sanction exporters who default on export proceed number

What you should know

According to Crunchbase, PayStack has raised $11.7 million so far.

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Corporate deals

London Stock Exchange seals $5billion Borsa Italiana sale

The sale is aimed at dousing tensions amidst growing concerns over LSE control of the European Bond market.

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London Stock Exchange seals $5billion Borsa Italia sale

In what appears to be a landmark trade deal, the London Stock Exchange (LSE) has agreed to a €4.3 billion ($5.1 billion) with Euronext to sell Borsa Italiana. This is according to insider sources from both firms.

If successful, the deal would bring LSE a step closer to clinching approval for its $27 billion purchase of Refinitiv, which is 45% owned by Thomas Reuters. The sale is aimed at dousing tensions amidst growing concerns over LSE control of the European Bond market.

READ: DEAL: Custodian Investment agrees to buy majority stake in UPDC

This is corroborated in a statement by London Stock Exchange Chief Executive, David Schwimmer, “We believe the sale of the Borsa Italiana group will contribute significantly to addressing the EU’s competition concerns,”

Recall earlier that LSE had entered exclusive talks with Euronext last month after the Paris bourse owner saw off competition from Deutsche Boerse DB1Gn.DE and Swiss rival SIX. The deal presents an opportunity for Euronext to expand its equity operations, while it presents an opportunity for LSE to recoup the €1.6.

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The deal will afford Euronext the opportunity to commence its first fixed income training via Borsa’s bond trading platform MTS.

(READ MORE: Global stocks close mixed on growing geopolitical concerns)

Commenting on the deal, the CEO of Euronext, Stephane Boujnah said “Euronext will significantly diversify its revenue mix and its geographical footprint by welcoming the market infrastructure of Italy, a G7 country and the third-largest economy in Europe.”

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How will the deal be funded?

Euronext with a market value of around 7 billion euros, might not be able to pull an outright cash deal without a sizeable amount of debt instruments. Hence, the firm plans to issue 1.8 billion euros in debt and raise 2.4 billion euros in new equity to fund it.

READ: MTN seeking to sell stake in Jumia Technologies AG

To raise funds and specifically secure the Italian government’s support, Euronext collaborated with state agency Cassa Depositi e Prestiti (CDP) and Italy’s biggest bank Intesa SanPaolo, who will subscribe to 700 million euros of Euronext’s equity issue.

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