TPG Growth acquires stake in Kenya’s Cellulant for $47.5 million

Africa’s fintech industry has won another big gold mine investment score after the Rise Fund, an impact fund run by private equity group TPG Growth, made its African first, leading a $47.5m deal to buy an unspecified stake in digital payments provider Cellulant.

The deal, according to the Rise Fun, also included Endeavour Catalyst and Satya Capital, is the largest involving a fintech company that does business only in Africa. “Much of the [fintech investment] activity in recent times in Africa has been specifically in the consumer lending space,” said Yemi Lalude, TPG’s managing partner for Africa. “This is different from that. What Cellulant has is a payment platform that enables people who have not had access to financial payments to get access in a way that is transparent.”

Cellulant which focuses on facilitating mobile payments and ecommerce was founded in 2004  after its initial plan was scribbled on a napkin has operations in Kenya and Nigeria and not works in 11 countries with 94 banks and seven mobile money platforms that have a combined potential customer base of 130m.

Ken Njoroge, Cellulant co-founder and chief executive, said the new capital would be used to scale up the company’s operations and expand into two more countries this year. “The payment market on the continent is [worth] anywhere between $20bn and $40bn over the next couple of years while all of the fintech players in the market [currently] collectively generate a little shy of $2bn,” he said.

Aly-Khan Satchu, a Nairobi-based investment adviser, speaking to FT about the deal said he was not surprised Cellulant had attracted the attention of a major private equity group, noting that Mr Njoroge had “built a successful business, grown it organically and delivered for big corporates across the continent”.

QZ reports that Since 2015, fintech startups in Africa have raised more than $100 million in investment. Last August, Flutterwave, a Lagos-based payments processing and infrastructure company, raised $10 million in its Series A round—one of the largest Series A rounds by an African startup. Fintech has also become a focus area for founders: of the over 300 fintech startups currently operational in Africa, more than half were founded between 2015 or 2016.