Business Maverick

Business Maverick

Africa Unicorn Maps Nasdaq IPO Unfazed by Regulatory Hurdles

Africa Unicorn Maps Nasdaq IPO Unfazed by Regulatory Hurdles
The Flutterwave Inc. booth during the Africa Tech Summit in Nairobi, Kenya, on Wednesday, Feb. 23, 2022. The tech summit, held in Kenya's capital, runs from 23-24 Feb. Photographer: Patrick Meinhardt/Bloomberg

Flutterwave Inc., an Africa-focused financial technology firm, is preparing for an initial public offering on the Nasdaq stock exchange, even as it deals with regulatory hurdles in its key markets.

The San Francisco and Lagos-based company will use the funds to expand operations in its existing markets and enter new ones in Africa, according to Chief Financial Officer Oneal Bhambani. The executive along with three others joined the company in June from American Express Co. as Flutterwave moves to bolster corporate governance at a firm that’s struggling with allegations of financial impropriety.

“We have the attractive market potential and opportunity to do so now,” Bhambani said in an interview Friday. The listing is an initiative of the payments company that’s “reaching the scale and trajectory comparable to what other investors seemed to invest in the public markets,” he said, without giving further details.

Flutterwave, valued at more than $3 billion and backed by B Capital Group and Tiger Global Management LLC, had its bank accounts in Kenya frozen under anti-money laundering rules and the central bank said it isn’t licensed to operate payments services in the country. The company has also been struggling with allegations in the media and lawsuits — including claims of refusing former employees stock rights, harassment and bullying — casting doubts over its IPO plans.

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Flutterwave denied accusations of financial misconduct, including claims of money laundering in Kenya and irregularities related to stock options, and said it has taken action against those found culpable for any form of harassment in the company.

Meanwhile, the company, which specializes in cross-border transactions, is expanding into lending. Flutterwave Capital will provide collateral-free, digital loans to business owners in Nigeria.

“We are a growth company, we have a tremendous opportunity to invest and really develop solutions for the largest enterprises in the world that transact in Africa,” Bhambani said. It plans to begin lending by end of this year, he said.

Revenue at African financial-technology companies may soar to $30.3 billion by 2025 — eight times higher than in 2020 — as a growing, young and under-banked population gets more access to the internet, according to a report by McKinsey & Co.

Flutterwave, which counts Flywire Corp. and Uber Technologies Inc. as its customers, says it has processed 200 million financial transactions valued at about $16 billion since it began operations.

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