FairMoney, a Nigerian digital bank based in Lagos and headquartered in Paris, is reportedly in talks to acquire Umba, a credit-led digital bank providing payroll and financial services in Nigeria and Kenya. The potential acquisition is valued at $20 million and would be an all-stock deal, according to sources.
This move indicates FairMoney’s interest in expanding its customer base by entering new markets, specifically targeting Kenya. The negotiations are still in the early stages, and both FairMoney and Umba have not commented on the matter.
Umba, founded in San Francisco in 2018, operates as a credit-led digital bank offering services such as loans, current accounts, savings accounts, fixed deposit accounts, and bill payments in Nigeria and Kenya. It has raised approximately $20 million in funding from investors, including Costanoa Ventures, Tom Blomfield (Monzo co-founder), and others.
FairMoney, known for its lending services in Nigeria, has previously expanded to India. The digital bank has raised over $57 million from investors such as Tiger Global, DST, and Speedinvest, with a valuation between $400 million and $500 million.
FairMoney’s potential acquisition of Umba may be driven by several factors. Umba recently diversified its offerings to include merchant financing and business banking products. Additionally, Umba obtained a microfinance license in Kenya in 2022 through the acquisition of a majority shareholding in Daraja Microfinance Bank, streamlining its entry into the Kenyan market.
The acquisition could provide FairMoney with the opportunity to leverage Umba’s existing infrastructure and combine fintech capabilities to launch services in Kenya without going through the lengthy licensing process. The sources suggest that Umba, while not actively seeking a sale, may find FairMoney’s offer enticing, especially considering its financial status, as outlined in an investor pitch deck.
In the context of the broader fintech landscape in Africa, where venture capital funding is tightening, there is a trend of digital banks and challenger banks exploring M&A opportunities to navigate challenges and achieve growth. If successful, FairMoney’s acquisition of Umba would mark its second deal in two years, following the acquisition of PayForce, a sub-brand of YC-backed Nigerian merchant payment service CrowdForce.
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