Financial services provider FirstRand has announced an agreement to acquire 20.1% of Optasia, one of the world’s largest AI-powered fintech platforms that provides financial access to people across emerging markets.

In a media release, FirstRand says the group is acquiring this strategic investment concurrent with Optasia’s initial public offering (IPO), which is in progress.

“FirstRand believes this investment in Optasia represents an exciting opportunity to leverage a proven fintech platform that has a successful record of solving the lending needs of underbanked or unbanked consumers, practitioners and microenterprises, which have had difficulty accessing traditional credit products,” the company says.

FirstRand describes Optasia’s ability to pre-score customers, process micro loans at scale and use mobile data sales as a credit collection mechanism as “highly innovative” and as clearly meeting the needs of millions of customers in 38 countries across Africa, the Middle East and Asia.

Ultimately, Optasia offers FirstRand access to these new markets and new customers, which would be challenging to acquire organically, and provides the group with geographic expansion opportunities in key emerging markets, the company says.

FirstRand adds that it believes that its retail and business bank FNB will be in a strong position to leverage the proprietary technology and AI capabilities of the Optasia platform to accelerate its own strategy to grow in segments in South Africa where it is underrepresented and markets in its broader Africa portfolio.

“We are excited to acquire this interest in Optasia which represents a key step in executing our growth strategy to leverage technology platforms to enhance credit capabilities and expand financial access across the continent,” says FirstRand CEO Mary Vilakazi.

In a separate release, Optasia explains that FirstRand, through one of its group companies, has entered into a definitive agreement with certain Optasia shareholders to acquire, on a fully diluted basis, 20.1% of the ordinary shares in the company, for R19 per ordinary share, as part of an off-market bilateral transaction concurrent with the IPO.

Optasia says the transaction involves the sale of ordinary shares by certain existing private equity shareholders as well as the founder, who will retain his long-term commitment to the business as a nonexecutive director and continue as a minority shareholder, subject to the lock-up and orderly market arrangements outlined in the pre-listing statement.

The selling shareholders in the transaction include King Supreme, Waha VAS, Zoey Enterprises, BH Holdings, ADP III, Chronos and Muller Capital.

Optasia says the definitive agreement does not include any governance or commercial rights in favour of FirstRand in respect of Optasia, and the Optasia shares acquired by FirstRand under the transaction have the same rights as those being offered to investors in the IPO.

It explains that FirstRand’s investment is subject to a 12-month lock-up from admission, noting that the lock-up arrangements applicable to FirstRand shall not apply to transactions relating to any ordinary shares – or other securities of the company – acquired in open-market transactions after the completion of the offer.

Optasia says this investment provides it with the long-term commitment of a respected financial institution, bringing valuable institutional and partnership support for the company’s next phase of growth.

Simultaneously, it offers FirstRand exposure to the strong competitive advantages that have established Optasia as one of the largest and fastest-growing AI-driven fintech platforms expanding financial inclusion across emerging markets.

“This significant investment by FirstRand, one of South Africa’s leading financial institutions, reflects strong confidence in Optasia’s model and in the impact we are creating.

“For over a decade, we have been driving financial inclusion across emerging markets, using AI and data to unlock access to credit and essential financial services for millions of people.

“As we move towards our listing on the JSE, this strategic investment marks another milestone in our journey - strengthening our foundation for long-term value creation and inspiring us to keep innovating for even greater impact. We are excited to welcome FirstRand as an investor in this next chapter for Optasia,” says Optasia CEO Salvador Anglada.

On October 8, Optasia announced its intention to implement the admission and offer including a primary issuance of about R1.3-billion to support growth, both organically and through future potential acquisitions and a secondary share sale from the selling shareholders of at least R5-billion by way of a private placement to selected qualified investors.

On October 20, Optasia published its pre-listing statement and announced a price range of R15.50 to R19 per offer share. Books opened the same day, and a coverage message on the offer for the IPO went out to the market within 24 hours.

Following the execution of the definitive agreement, Optasia says the selling shareholders confirm that their overall sale will be increased through the FirstRand investment, which is structured to occur concurrently with the IPO.

As a result, Optasia says the size of the IPO, comprising the institutional placement, will remain unchanged from the amount outlined in the pre-listing statement, published on October 20.

The bookbuilding period for the IPO will be extended until 12:00 South African standard time on October 30.

Optasia says this extension provides investors with additional time to consider the new information as part of their investment decisions, noting that Optasia and the selling shareholders reserve the right to accelerate the IPO offering.