Picture: BLOOMBERG
Picture: BLOOMBERG

Naspers’s PayU agreed to buy Turkish digital payments company Iyzico for $165m (R2.4bn) in its biggest fintech acquisition yet.

The deal will expand the Dutch unit’s exposure to Turkey’s e-commerce market, which is growing at more than 10% a year, the company said on Tuesday. The acquisition must still be approved by regulators and is expected to close in the next few months, it said.

Sasfin Securities senior portfolio manager, Nesan Nair said "there has been very little market reaction in SA bearing in mind that $165 is a relatively small acquisition relative to the size of Naspers, even though it’s their biggest in payments."

"The stretched short-term technical position leaves the share vulnerable to profit-taking in the sessions ahead and the lyzico deal is unlikely to meaningfully improve or contribute to the immediate short-term trading performance for Naspers" said Momentum Securities technical analyst, Ernie Gruhn.

PayU has invested more than $500m in the industry since 2016 as the firm positions itself to profit from rising internet adoption and e-commerce in emerging economies. Its focus on payments, one of fastest growing areas in finance, puts the company in position to take a share of an industry that Boston Consulting Group forecasts will produce $1-trillion in new revenue through 2027.

Graphic: RUBY-GAY MARTIN
Graphic: RUBY-GAY MARTIN

“We are constantly looking for ways to augment the naturally high organic growth in our markets by investing in new technology, as well as market consolidation,’’ said Mario Shiliashki, head of payments at PayU.

“Being a leader in high-growth markets will help us to grow faster than others.’’

PayU is focused on faster growing markets such as Russia, India and African countries where online payments are in their infancy. In addition to the Iyzico acquisition, its largest to date, the company has also invested in the Indian payments sector as well the Intercontinental Exchange’s cryptocurrency venture, said Shiliashki. It is also on the lookout for future acquisitions, he said.

"Turkey, in particular, is a market with extremely high potential and we are excited to significantly accelerate our presence and growth there" said Shiliashki. 

Iyzico was founded in 2013 and is used by small and medium-sized companies in Turkey as well as global companies , including Amazon and Nike.

Turkey is an attractive area for payments because only a fraction of the three-million or so small- and medium-sized business in the country use digital payments and e-commerce infrastructure, said Barbaros Ozbugutu, CEO and co-founder of Iyzico. High internet penetration and a young population suggest there is large potential for growth, he said.

Naspers, which holds a 31% stake in Chinese internet group Tencent, will move its  internet businesses to a new listing in Amsterdam.

 

Bloomberg