Financial services firm Nedbank Group has entered into a binding agreement to acquire 100% of fintech innovator iKhokha in an all-cash deal for about R1.65-billion.

The acquisition will see iKhokha become a wholly owned subsidiary of Nedbank, while continuing to operate under its own brand and leadership team.

This transaction forms part of Nedbank’s strategy to deepen its support for small and medium-sized enterprises (SMEs) through digital innovation and inclusive financial services.

Founded in 2012, iKhokha offers a suite of affordable, accessible SME cash advance and payment and business management tools.

“This acquisition is a natural evolution of our existing relationship with iKhokha and we are excited to welcome iKhokha to our Nedbank family,” says Nedbank Group personal and private banking managing executive Ciko Thomas.

“The acquisition is a pivotal moment in our strategy to empower the SME market. By combining their innovative technology with our deep banking experience, we will provide small business clients with the best-in-class tools they need to thrive,” he says.

“Joining forces with Nedbank gives us the platform to scale our impact, further accelerate product innovation and unlock new value for our merchants,” says iKhokha CEO and co-founder Matt Putman.

“The transaction also opens the door for us to explore expansion into other strategic markets on the continent. We remain committed to our mission of empowering entrepreneurs and building tools that help small businesses thrive,” he says.

“Empowering entrepreneurs is essential to building a thriving and inclusive economy,” says Nedbank Group CE Jason Quinn.

“iKhokha’s mission and technology align with our vision for digital transformation in the SME sector. Together, we will unlock new opportunities for growth and financial inclusion in South Africa and potentially abroad,” he adds.

The transaction is subject to regulatory approvals and is expected to conclude in the coming months. The acquisition includes a comprehensive management lock-in to ensure managerial continuity and alignment with long-term growth objectives.

“There is great alignment across both leadership teams on the synergies that can be unlocked through this transaction, and we believe our combined strengths will result in a truly differentiating and highly competitive value proposition for SMEs in market,” says Putman.