MFS Africa - 2022Q1

  • MFS Africa consolidated Baxi’s financials from Jan 1st, 2022.
  • As of the end of Mar 2022, MFS Africa has enabled money transfer on 206 live nodes, resulting in 890 live remittance channels.
  • In 2022 Q1, MFS’s transaction values hit $851 million, increased 270% YoY and 197% QoQ.
  • In 2022 Q1, MFS’s revenue hit $5.83 million, increased 145% YoY and 81% QoQ.
  • In 2022 Q1, MFS’s operating expenses was $7.71 million, increased 150% YoY and 58% QoQ.
  • The net loss in 2022 Q1 was $3.53 million.
  • As of the end of Mar 2022, the Company has $47.9 million in cash and cash equivalents.

Company Overview

Founder 2009
Sector Money Transfer Hub
Address Registration address (UK), Headquarters address (Johannesburg, South Africa)

Management Team

Dare Okoudjou CEO
Mazunzo Chaponda Co-Founder and Managing Director
Rashi Gupta COO
Luke Kyohere CPO
Julian Adkins CFO
Mxolisi Msutwana Chief Network Operations Officer
  • In May 2022, the Company hired Julian Adkins as CFO.

Board of Directors

Dare Okoudjou Founder & CEO
Patrick Gutmann Managing Director
Rashi Gupta COO
Mohamed Cassim Fonty MFS
Julius Tichlelaar AfricInvest Group
Kotsuki Kaede LUN Partners Capital Limited
Wim van der Beek Goodwell
Marlon Chigwende Admaius Capital Partners
  • CommerzVentures and AXA IM appointed one observer each.

Current Operations

Corporate Structure (Subsidiaries)

Financing History

Time Round Amount ($ m) Price ($) Investors
Up to 2016-12 NA $9.4 NA Management team, Angel investors, Related family offices
2018-01 B $4.15 700.00 LUN Partners Capital Limited, Goodwell
2018-08 B+ $8.85 805.00 LUN Partners Capital Limited, Goodwell, ShoreCap III(Equator), FSDA, Fonty MFS Holdings Ltd
2019-05 B+(warrant) $2.00 805.00 LUN Partners Capital Limited, Goodwell
2019-09 B++ $5.33 NA Goodwell, FSDA, SSAT, FMH, Moka
2020-03 CB $7.30 NA Goodwell, LUN Partners and Allan Gray
2020-08 CB $2.70 NA LUN Partners, Goodwell, ShoreCap III(Equator)
2020-11 CB $10 NA Goodwell, ShoreCap III(Equator)
2021-07 CB $22 NA Goodwell, LUN Partners
2021-09 C $20 22.09 AfricInvest, CommerzVentures, Endeavor
2022-06 C+ $58.5 25.71 Admaius, AXA IM, Vitruvian Partners, AfricInvest, CommerzVentures, etc.

Financial Analysis

MFS Africa consolidated Baxi’s financials from Jan 1st, 2022. In 2022 Q1, MFS’s transaction values hit $851 million, increased 270% YoY and 197% QoQ.

In 2022 Q1, MFS’s revenue hit $5.83 million, increased 145% YoY and 81% QoQ.

2021-2022 Net Revenue ($’000)

2022Q1 Revenue Composition($’000)

Breaking down the revenue of 2022 Q1, Disbursements (Formerly Money Transfer) was the largest portion of the Company with the revenue number being $3.73 million. Revenue from disbursements has increased by 21% compared with last quarter, accounting for 64% of total revenue. The transaction value of disbursements was $289 million in 2022 Q1, showing a 10% increase compared with last quarter.

Revenue from Agents was fully contributed by Baxi. In 2022 Q1, Agents was the second largest portion with the revenue number being $1.92 million, accounting for 33% of total revenue. Agents surpassed disbursements to become the No. 1 contributor to the company’s total transaction value and hit $536 million in 2022 Q1, accounting for 63% of total transaction value.

The transaction value of Collections (Formerly Merchant Services/Financial Services) was $25 million in 2022 Q1, a 9% increase compared to last quarter. Collections revenue was $0.14 million in 2022 Q1, a 18% increase compared to last quarter.

The transaction value of Airtime was $0.66 million in 2022 Q1, a 11% increase compared to last quarter. Airtime revenue was $0.03 million in 2022 Q1, a 83% increase compared to last quarter.

As a result of  Baxi’s consolidation, the Company’s operating expenses in 2022 Q1 was up to $7.71 million, increased 150% YoY and 58% QoQ. The largest expense item was salaries and wages, which was $3.79 million, accounting for 49% of the total expenses. At the end of Mar 2022, the number of employee was 226, an increase of 35 employees compared with the end of last year.

Followed by marketing costs of $1.63 million, accounting for 21% of the total expenses, which was up on material in Baxi following aggressive POS rollout.

Administration expenses, general expenses, and travel & entertainment accounted for 10%, 6%, and 5% of the total expenses, respectively.

Operating Expenses: 2021Q4 ($’000)

EBITDA for 2022Q1 was – $1.37 million, net loss in 2022 Q1 was $3.53 million.

At the end of Mar 2022, the company has $47.9 million in cash and cash equivalents, of this $40.32 million treasury funds used to finance the Disbursements fund flows; $7.58 million is available to fund the operations of the business.

Recent Developments

Key Operational Development

As of the end of Mar 2022, the company has 206 transfer nodes (210 in 2021 Q4) and 890 remittance channels (848 in 2021 Q4).

In 2022 Q1, the transaction value of the company reached $851 million, increased 270% YoY and 197% QoQ.

Transaction Value: 2016 – 2022
($,’000,000)

Note: 16Q1 stands for 1st Quarter in 2016

M&A

The Company is negociating with Global Technology Partners (GTP) for a potential acquisition, which will accelerate MFS Africa’s offering of card connectivity to mobile money users.

GTP is a developer of prepaid and mobile payment software. Its prepaid and mobile payment platform integrates several prepaid cards with a single bank account and allows users to make prepaid payments for online shopping and ATMs.

More than 500,000 clients in over 30 countries use GTP prepaid cards. With MFS Africa’s merger, the total clientele reach could reach several millions. The transaction is expected to close on June 2022.

Progress of Financing

  • Series C Extension

The Company is in the process of closing an additional US$100 million in equity and debt funding led by Admaius Capital Partners. New equity investors, Vitruvian Partners and AXA IM Alts, alongside existing investors, AfricInvest FIVE and CommerzVentures also joined the round. The Series C extension is expected to close on June 2022.

People

In May 2022, the Company hired Julian Adkins as CFO. Julian previouslsy worked for Millicom (Tingo) as Vice President and Africa CFO since 2017.

Market Overview

Global Market:
According to the GSMA report, the epidemic has contributed to the growth of mobile money business, as shown in International remittance business, deposit business, loan business and insurance business. According to statistics, the number of registered mobile wallet users in regions other than developed countries and China reached 1.2 billion, up 13% year-on-year, and the number of monthly active users reached 300 million, up 17%.

Number of monthly active users of mobile wallets

other than developed countries and China

Source: GSMA

International money transfer transactions via mobile wallets

The daily transaction volume of mobile wallets in regions other than developed countries and China exceeded $2 billion, with $767 billion in transactions for the year, up 22% year-over-year. The number of transactions was 41 billion, up 15% YoY, with more than $1 billion in international remittances passing through mobile wallets each month, up 65% from the previous year.

African Market:
According to the GSMA report, at the end of 2020, the number of unique subscribers has reached at 495 million, and the number of SIM cards which connected with networking has reached 930 million, with an average annual growth rate of 4.8%.

According to Boston Consulting, in 2020, total trading value through mobile phones reached at $50 billion in Kenya, and the annual transaction value of mobile payment accounts for 87% of the country’s GDP. As of January 2021, Kenya has 66.59 million mobile payment registered accounts and 74.1 million mobile payment agents.

Ghana’s transaction value of mobile payment accounts for 82% of the country’s GDP. In March 2021, The Bank of Ghana has mentioned that the number of active mobile payment accounts in Ghana increased from 14.7 million in February 2020 to 17.5 million in February 2021, while the number of active agents increased from 0.24 million to 0.47 million respectively. The monthly mobile payment volume in Ghana increased from 193 million in February 2020 to 295 million in February 2021, and total transaction value increased from $5 billion per month in February 2020 to $11.5 billion per month in February 2021.

Nigeria, with a population of 210 million, is the African country that attracted the most investment in 2021. Nearly half of people in Nigeria still does not enjoy any banking services, and there is a huge demand for mobile payment. Egypt has a good foundation for development. Nearly half of the population have access to the Internet, and 93% of the population have mobile phones. However, only 8 – 9 million wallet accounts in Egypt, with about 0.2 – 0.3 million active users per month.

According to the prediction given by Boston Consulting, by 2025, the final scale of the entire African may be as high as 850 million accounts, and the annual trading volume will reach at $2.5 – $3 trillion.

Competitors

Flutterwave

2016 – USA

Flutterwave helps businesses build customizable payments applications through its APIs. Flutterwave is live in 20 African countries with an infrastructure reach in over 33 countries on the continent.

As of Q1 2021, Flutterwave processed over $9 billion amount in payments worldwide. Flutterwave partnered with Visa, Mastercard、Worldpay、PayPal and Alipay, etc.

Financing History

  • Seed, $0.23M, Y Combinator, Soma Capital
  • Series A, $19.45 M, LoftyInc Capital Management
  • Series A+, $10 M, Mastercard, Raba
  • Series B, $35 M, Headline, Greycroft
  • Series C, $170 M, Worldpay, Tiger Global Management, DST Global
  • Series D, $250M, B Capital, Alta Park, Whale Rock, Lux Capital

Recent News

  • In Feb, Flutterwave raised $250 million in a Series D round that tripled the company’s valuation to over $3 billion and announced the addition of small business lending, fintech-as-a-service (FaaS).
  • In Mar, Flutterwave has received approval from the Bank of Tanzania (BoT) to launch its payment service in the country.

TransferTo

2016 – Singapore

TransferTo is a global leader in remittances, which built a B2B cross-border by providing real-time remittance support for financial institutions and mobile operators. In February 2019, TransferTo has rebranded as two separate company brands – DT One for mobile top-up and rewards business and Thunes for cross-border payments businesss.

Thunes covered 80+ countries, and coorperated 9,000+ payment companies, including Western Union, PayPal, M-PESA, etc.

Financing History

  • Series A, $10M, GGV Capital
  • Series B, $120M, Helios Investment Partners, Insight Partners

Recent News

  • In Jan, Thunes Kicks Off Expansion into Greater China and will intensify its focus on building local partnerships with local digital payment players.
  • In Mar, Thunes partners with Clearpay to enable Buy-Now-Pay-Later options for its 100,000 merchants.

TerraPay

2014 – Netherlands

TerraPay links mobile wallet providers, banks, financial institutions, remittance operators, etc. to provide international remittance services.

In 2016, TerraPay acquired a 100% stake in Pay2Global, a regulated digital international remittance company with “right to travel” to the European Economic Area (EEA).

TerraPay is currently regulated by the FCA. In addition, TerraPay also cooperates with MoneyTrans (International Money Transfer Company), Paga (Nigeria Financial Services Company), YES BANK (India’s fourth largest private bank), and Xpress Money (UK Instant Remittance Company).

Financing History

  • TerraPay acquired a 100% stake in Pay2Global.
  • In July 2019, TerraPay has closed a round of financing of $8.1M from IFC.

Recent News

  • In Jan, TerraPay partners with NPCI International Payments Limited to allow Indians with an active UPI ID to receive real-time, international payments into their bank accounts via TerraPay’s adaptive and secure payments technology.