Peach Payments seals R579m funding deal

SA digital payments platform Peach Payments has concluded a R579m funding round led by UK-based asset manager Apis Partners, a deal first announced in April.

Earlier in 2023, Apis Growth Fund II, a private equity fund managed by Apis Partners announced an investment of €29m ($30m or R579.3m) in Baobab Payments, which trades as Peach Payments.

On Tuesday, the parties said the agreement, which had been subject to approval from SA’s Competition Commission and a number of customary procedural and closing conditions, had been finalised.

Peach, the second-largest online payment gateway in SA, was founded by Rahul Jain and Andreas Demleitner in 2012 in Cape Town. It expanded to Kenya in 2018 and to Mauritius in 2021.

“This funding has been raised to accelerate growth and will be used to build out new products and expand into new countries in Africa,” Jain said.

“We also intend to double down on the markets in which we already have a presence SA, Kenya, Mauritius to grow market share, expand our headcount and launch new products.

“All these actions have the core focus of serving our merchants and helping them to scale their businesses,” he said.

The payments start-up, which has about 150 staff, enables small and large merchants to accept, manage and make e-commerce and digital payments via mobile devices and the web. Services include online payment acceptance, payouts (disbursements), and subscription through various payment types such as cards, electronic funds transfers, digital wallets, mobile money, and buy now, pay later options.

The company says the real value of its model is that businesses that use Peach in one country do not need to find a new payment partner when they expand to a new African country they can just grow into the new geography.

The payment platform hopes to expand this functionality across Africa’s 54 countries, some with as many as 12 payment methods, including credit cards, debit cards, instant EFTs, buy-now-pay-later options and electronic vouchers.

The Competition Commission approved the deal in May, the customary requirements were met in August and funds were transferred earlier this month, the parties said. The legalities of the funding round were handled by SA’s Webber Wentzel and German law firm V14.de.

Peach is hoping to use its investor’s expertise in helping to scale its operations. Apis specialises in backing growing financial services and financial infrastructure businesses by providing equity capital. Through its various units, the firm has more than $1.2bn under management.

“Their ability to listen and advise on strategic moves is a valuable asset for any start-up along its journey. We specifically wanted a shareholder that was not a helicopter investor but would be actively involved in helping us grow the business,” Jain said.

Peach’s investors include UW Ventures, Launch Africa and AG Ventures. This adds to the list of fast-growing fintech companies that continue to drive investment interest and dollars to the country’s shores.

The largest capital raises in recent times for local start-ups have been $120m (about R2.14bn) for Jumo, led by Fidelity Management & Research at a $400m valuation; $48m for Ozow, led by China’s Tencent; and $83m for Yoco. All three are fintech firms. Insurance technology platform Naked recently raised $17m in a third round of funding.