Nigeria’s Second Largest Fintech Acquisition Deal: MFS Africa Acquires Baxi

Digital payment gateway, MFS Africa in a major coup has acquired one of Nigeria’s largest digital solutions and distribution companies with a 90,000-strong agent network across the country, Capricorn Digital for an undisclosed fee.

The deal, subject to Nigeria’s apex bank approval, the Central Bank of Nigeria (CBN), an 100 percent cash acquisition will be the company’s third acquisition on a space of five years, will herald an MFS Africa incursion into Africa’s largest economy that has had its presence earlier limited as a result of the little number of mobile wallets Nigeria boasts of.

Capricon Digital’s brand name and identity will now be changed to MFS Africa, reflective of the 100 percent acquisition, with its major product, Baxi retaining its name but will now be under the MFS Africa brand.

Capricorn Founder and CEO, Mr. Degbola Abudu, told TechCabal that the deal is the second-largest of its kind in Nigeria’s fintech space, just a little behind the $200 million Stripe paid for Paystack last year. 

MFS Africa is undoubtedly Africa largest fintech interoperability hub and according to the ‘about section’ of the company’s website, the l digital payments gateway is supported by a multi-cultural, multi-talented, agile team from over 30 different nations that is driven to create access to a borderless world – a world where access overcomes borders.

MFS Africa, founded by Dare Okoudjou in 2019 serves a connective medium for banks, telcos and money transfer operators across over 30 countries through a single integration point. The company, with an estimated 320 million mobile money customers interacting across various digital wallets without transaction fees associated with switching platforms, has Paga, MTN mobile money, Ecobank and Safaricom among the numerous operators integrated in its database hub.

Capricorn on the other hand, founded in 2014 by Folu Majekodunmi, with Baxi, its SME-focused brand, pilots an ecosystem of digital payment services, with the mandate to assist Nigerians and other parts of West Africa with everyday casual and important payment needs like utility bill payments, airtime purchases, pay-TV and data subscriptions, withdrawals, money transfers and many others. The litany of services is rendered through its vast network of agents and merchants in underdeveloped areas, where Bank presence is limited or non-existent. These retail merchants are sighted in the remotest locations across the country, through its BaxiBox POS, BaxiPay, Baxi MPoS Device, and BaxiRIMS products.

MFS Africa’s Founder and Chief Executive, Dare Okoudjou while analyzing the latest accretion explained that his brand opted for full acquisition as both parties (MFS Africa and Capricorn) consider that more effective for achieving their shared long-term ambitions. He added that acquisition talks with Capricorn evolved from a minority investment to a full buyout.

In his words:

“The more we spoke with Dee (Debola Abudu, Baxi’s co-founder), the more we realized what we could achieve with a full acquisition instead of being only investors in which case there could be misaligned incentives.”

Dare Okoudjou, MFS Africa founder and CEO (left) and Degbola Abudu, co-founder of Baxi.

He further explained that the need to “bolster our presence in Nigeria” as a result of its unique market features, noting that the prevalence of offline payment touchpoints over mobile-first transactions, was a deciding factor in MFS Africa’s interest in Capricorn.

“In other markets, one or two partnerships with mobile money operators could see us reach 60% of digital payment users in the country,” he says. “However, mobile money isn’t that widely adopted in Nigeria. Instead, agent networks such as Capricorn’s have grown rapidly.”

Baxi’s co-founder, Degbola Abudu, on his own part averred that the future of the mobile payments landscape in Africa is a game of few, that has consolidation as the way forward, while positing that an attempt to scale alone would require more capital expenditure and a longer time to execute.

“It’s a good time to partner with a company that brings a real pan-African presence and we see synergies across our operations. They offer a wide range of value-added products and services like cross-border payments while we have access to SMEs in Nigeria, one of the biggest markets in Africa,” he says. “We believe that we’ve barely scratched the market’s potential. The deal brings many things that allow us to grow very quickly.”

With the full acquisition of Capricorn Digital, MFS Africa is expected to build its major product, Baxi into a very key component of its digital payment network, that gives its teeming customers the leverage to initiate cross-border payments to and from Nigeria, akin to the practice with mobile money operators across the African continent. MFS Africa is expected to also dilate Baxi’s move to allow offline SMEs have the ability to select markets that are within its footprints.

 “We’ve been able to build a large business with relatively small capital but now we want to be able to compete, not just in Nigeria but also across Africa,” Abudu says. “The deal with MFS Africa gives us leverage to take Baxi and the model that’s been so successful in Nigeria to other African countries.”