Lesaka Technologies Moves to Acquire Bank Zero in $60 Million Digital Banking Deal

Prime Highlight

Lesaka Technologies is set to acquire app-only bank Bank Zero, with the Competition Commission recommending approval without conditions.

The acquisition is seen as transformative, integrating a trusted neobank into Lesaka’s fintech platform to enhance digital banking offerings.

Key Facts

The $60 million deal will be financed through newly issued Lesaka shares and up to $5 million in cash, with Bank Zero shareholders retaining roughly 12% of Lesaka’s fully diluted shareholding.

Bank Zero, launched in 2021, currently serves over 40,000 funded accounts with more than $22 million in deposits, offering low-cost digital banking for personal and business users.

Background

South Africa’s digital banking sector is set for a major shift as Lesaka Technologies moves ahead to buy Bank Zero, the app-only bank co-founded by former FNB CEO Michael Jordaan. The Competition Commission has recommended that the Competition Tribunal approve the deal without conditions, clearing a key regulatory hurdle.

Announced in July, the transaction is valued at about $60 million. It will be financed through newly issued Lesaka shares along with up to $5 million in cash. Once completed, Bank Zero shareholders are expected to retain roughly 12% of Lesaka’s fully diluted shareholding. As part of the agreement, Jordaan will take a seat on the Lesaka board, while co-founder Yatin Narsai will join the company’s executive leadership team. Their shareholdings will remain under lock-up agreements ranging from 18 to 36 months.

The Commission said the proposed acquisition is unlikely to reduce competition or raise public-interest concerns in the market.

Bank Zero, started in 2018 and launched in 2021, provides personal and business banking through a secure app. The bank started during the pandemic but grew to over 40,000 funded accounts and now holds more than $22 million in deposits. Customers like it for low-cost digital banking, which works well for both underserved and tech-savvy users.

Jordaan, who led FNB’s digital transformation, has played a key role in Bank Zero’s strategy and growth. Narsai, formerly head of IT and Retail Banking at FNB, identified the Mutual Banking licence as a cost-effective pathway to launch the venture.

Lesaka, which focuses on low-cost financial services for underbanked South Africans, sees the acquisition as a “transformative event.” Chairperson Ali Mazanderani said the merger will embed a trusted neobank within Lesaka’s fintech platform, giving the company an edge in cross-selling digital banking services.