Flutterwave, Africa’s largest start-up, is pressing ahead with plans for an initial public offering after making headway in resolving allegations of financial impropriety in Kenya so that it can access more and bigger international partners, its CEO said.
Olugbenga Agboola, who is also a co-founder of the pan-African payments company, brushed aside accusations that it had refused to honour former employees’ stock rights, and that staff were harassed and bullied, saying these were “very, very isolated” cases and they wouldn’t affect the planned share sale. The company has won approval for the first step in securing the right to operate in Kenya, a key African market, he said.
“There’s some kind of customers we’ll attract when we are public,” Agboola said in an interview in London. “The large global clients who need you to have the same level of compliance and level of global view that they have.”
Since its founding in 2016, Flutterwave has rapidly expanded and now has a presence in about 30 African countries. Agboola has led funding rounds, with one in January last year tripling the company’s valuation to US$3-billion (R56.5-billion at the time of writing).
Based in Lagos and San Francisco, Flutterwave has attracted investments from venture capital firms including Tiger Global Management and works with companies including Alibaba’s Alipay, Uber Technologies and Netflix. Agboola’s stake in the company was worth more than $370-million as of the company’s funding round last year, according to an analysis by the Bloomberg Billionaires Index using Pitchbook data.
Agboola conceded that “the markets aren’t great right now”, and this could slow any listing. The company has previously said it may sell shares in New York and possibly Nigeria.
“As Africa’s largest fintech and the only one still having breadth across the continent, it offers public market investors probably the best potential to invest in the African continent,” said Lexi Novitske, a general partner with Norrsken22, an Africa-focused tech fund that was set up by Swedish start-up founders.
Frozen Flutterwave
Still, funding for start-ups has slowed across the globe and the fast-growing company, which has 750 employees, will need to work at scaling up governance ahead of an IPO. The volatility of Nigeria’s naira could also complicate matters.
Agboola’s plans were roiled in 2022 by the harassment allegations. They also took a hit in July last year, when the Kenyan high court froze Flutterwave’s bank accounts under anti-money laundering rules and the central bank said it wasn’t licensed to operate payments services in the country.
In February, the company was allowed to apply to register its name with the registrar of companies and proceed with an application for a money remittance licence from the Central Bank of Kenya, according to Agboola, who expects the licence to be issued soon. A court case to reopen the bank accounts has been adjourned several times, and the matter remains unresolved, Flutterwave said in a response to queries.
While declining to give an annual increase in total revenue, Flutterwave said that its payment processing business through its payments app, SendApp, increased 23-fold in the first half of this year compared with the same period in 2022. Payments through point-of-sale devices rose more than fivefold and revenue in its small and medium business unit jumped almost fourfold.
Agboola sees the company growing its presence in the markets it is currently in and possibly seeking acquisitions to further its reach.
“The goal is to make merchants across Africa, consumers across Africa use us more and know that we are the most reliable platform to use,” he said. “Africa is huge, the potential is huge.” — Reporting with Yinka Ibukun and Bella Genga, (c) 2023 Bloomberg LP