TA Associates acquires minority stake in Interswitch

TA Associates

Without divulging details of the deal, TA Associates has acquired minority stake in Nigeria’s Interswitch.

Interswitch is majorly owned by Helios Investment Partners. The company had tried to take Interswitch public this year but the plan was shelved after the company cited Forex drought and lack transparency in the management of the foreign exchange market which was a major concern to investors.

Despite the deal, Helios Investment Partners will remain as the majority shareholder in Intersitch.

“By strategically partnering and aligning its interests with key banks, merchants and other institutions, Interswitch has become a leading provider for payments solutions in an emerging and rapidly growing market in Nigeria,” says Naveen Wadhera, a managing director at TA Associates who will join the Interswitch board of directors. “Interswitch is a unique, high quality and strategic asset located in one of Africa’s leading economies. We are delighted to expand upon our longstanding presence within the global payments industry through our partnership with the management team and Helios, and look forward to helping Interswitch continue to expand its business.”

“Since our founding, we have been committed to creating social, environmental and economic value by facilitating trade through forms of exchange that are secure, convenient and consistent,” says Mitchell Elegbe, founder and managing director at Interswitch. “Keeping that in mind, we believe a partnership with a growth private equity firm such as TA Associates will prove highly beneficial to our ongoing efforts of consolidating the impact of our services and increasing financial inclusion for all. We welcome TA as our newest investor and look forward to benefitting from their experience in the payments space and their valuable insight and support.”

“With our investment in Interswitch in 2011, we backed a talented founder and management team, and have worked hand-in-hand with them to institutionalise the business and build the platform, spearheading growth not only in their core processing and card scheme businesses but also into mobile payments, expansion into East Africa and the launching of products and services to address the unbanked – driving financial inclusion. As the majority investor in Interswitch, we look forward to working with the company’s first-rate management team and TA Associates to drive the next phase of the company’s growth,” says Alykhan Nathoo, partner at Helios Investment Partners.

Babatunde Soyoye, Helios’s co-founder and managing partner, adds: “For TA Associates to have made Interswitch their first investment in Africa we believe is a testament to Interswitch’s successful growth trajectory to date, and the quality and resilience of its brand and business model. We are confident that TA’s domain expertise and global reach will benefit Interswitch as we move forward together in partnership.”

The digital payments evolution is in the early stages of development in Nigeria, with cash used for 99 per cent of transactions according to McKinsey & Company, versus approximately 50 per cent for developed markets in North America and Europe. Despite the young market, the size of the Nigerian payments opportunity is underpinned by its continent-leading population and sizeable economy. Based on estimates from McKinsey & Company, Interswitch occupies a leading position in the emerging marketplace, especially in debit cards, which comprise 99 per cent of all cards in Nigeria.

“We strongly believe in the global trend towards payment digitalisation,” says Ajit Nedungadi, a managing partner at TA Associates who will also join the Interswitch board of directors. “Given Interswitch’s impressive reach into Nigeria’s payment ecosystem, we expect a continuation of the company’s impressive growth and are honoured to have the opportunity to partner with what we believe to be a fantastic management team and a leading African investor.”

Interswitch joins TA Associates’ other current and past payment processing investments worldwide, including BluePay Processing, Cardtronics, IndiaIdeas.com (BillDesk), Procare Software, Retriever Medical/Dental Payments, W.A.G. payment solutions (Eurowag) and YeePay.

Latham & Watkins served as legal counsel to TA Associates. Debevoise & Plimpton served as legal counsel to Helios Investment

Through add-on acquisitions, Interswitch also operates in Kenya and Uganda. The company has not issued any statement on when its initial public offering will take place.

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