DURBAN - Net1 UEPS Technologies has agreed to sell its South Korea payment processor unit, KSNET, to Stonebridge Capital and Payletter for $237 million (R3.44 billion) as the financial services group focuses on its core fintech strategy, boosts liquidity and maximises shareholder.
Net1 chief executive Herman Kotzé on Monday said,"This transaction marks a significant milestone in our strategic plan, and allows management to further focus on its core strategy of providing fintech solutions for the underbanked in South Africa, Africa, Europe and other emerging economies as well as our new blockchain related products.”
Net1 has its primary listing on the US Nasdaq Stock Exchange and is also listed on the JSE.
In explaining the rationale behind the sale of the business, Kotzé said KSNET was a profitable and cash generative business, but operated autonomously and in a more developed economy with limited overlap with the group’s other activities.
“We also believe that the intrinsic value of KSNET was not appropriately reflected in Net1’s overall valuation. Therefore, our board commenced a strategic review of our various businesses and investments late last year and, ultimately, decided to sell KSNET in order to focus more on our core strategy, boost liquidity and to maximise shareholder returns,” Kotzé said.
KSNET is a leading Republic of Korea payment processor, with a base of 220 000 merchants and an extensive direct and indirect sales network. KSNET’s core operations consist of three project offerings; card value-added network (VAN), payment gateway and banking VAN.
The transaction, which is not subject to a financing condition, was expected to close in March.
Kotzé said Net1 believed Stonebridge Capital and Payletter were the right strategic partners for KSNET, as they were committed to building further scale in the South Korean payments market.
In the year to end June 2019, Net1 reported a loss of $248m, hurt the loss of the controversial government grants South African Social Security Agency (Sassa) contract and impairments at troubled mobile operator Cell C.
Last year Net UEPS Technologies did a deal to reduce its stake in DNI-4PL Contracts to 38 percent from 55 percent to settle a R400 million vendor obligation.
The group said it would provide more details about the transaction in its second quarter earnings, which were scheduled to be at the beginning of next month.