South African fintech group Adumo has raised ZAR225 million ($15 million) in fresh funding from International Finance Corporation (IFC), the World Bank Group’s private-sector investment arm said Tuesday.
IFC and the IFC Financial Institutions Growth Fund, an investment vehicle managed by IFC’s Asset Management Company, made the investment via preferred shares. Previously, IFC had said it was looking to invest an equal sum from both the entities in Adumo.
IFC’s investment will support Adumo to make digital payments systems more affordable and accessible to smaller businesses in Africa, many of which rely on cash transactions.
Adumo is South Africa’s largest independent payment provider. It has a presence in 14 African countries. The company owns merchant acquirers Sureswipe and Ikhokha, and payment processor Innervation Pan African Payments.
“The pandemic and associated impact on consumers and businesses are transforming the face of the payments industry with interest in cashless payment services at an all-time high. The funds we have raised from our new equity partners will help us roll out new payment innovations and purpose-based lending services to support consumers and retailers as they navigate an uncertain 2021,” said Paul Kent, CEO at Adumo.
“Through this investment in Adumo, we will be helping small businesses tap into the digital economy, which is more important now than ever before,” said Sérgio Pimenta, IFC’s vice president for the Middle East and Africa.
In South Africa, micro, small and medium-sized enterprises employ over half of the workforce and contribute around 34% of gross domestic product, but many don’t have access to key services that would help their business grow. Digital and mobile payment solutions can help them increase footfall and improve customer retention by supporting the transition away from cash-based transactions.
Adumo, previously known as Crossfin Transactional Solutions, claims to process more than $5 billion in transactions annually through more than 30,000 active clients and across 50,000 active card machines.
In 2018, Apis Growth Fund I, a private equity fund managed by the UK-based financial services asset manager Apis Partners LLP, invested growth capital in Adumo.
Udayan Goyal, managing partner at Apis Partners LLP, said: “Our thesis around building the leading diversified non-bank payments company in South Africa has been validated by this investment by the IFC.”