Cross-Border Payments: dLocal's Proposed Aza Finance Acquisition Signals African Growth
The dynamic landscape of fintech in emerging markets is witnessing a significant consolidation, particularly in the cross-border payments sector. In a move set to further reshape this space, Latin American fintech giant dLocal is in advanced talks to acquire Aza Finance, formerly known as BitPesa, an African pioneer in cross-border payments. This strategic acquisition underscores dLocal's aggressive expansion into the African continent, following its strong foothold in Latin America and growing presence in Asia.
dLocal formally announced its intention to acquire Aza Finance via a LinkedIn post on Tuesday, pending regulatory approvals. The company emphasized that this acquisition aligns with its core commitment to delivering localized and seamless payment experiences across the EMEA (Europe, Middle East, and Africa) region. While the financial specifics of the deal remain undisclosed by dLocal, Bloomberg, citing an anonymous source familiar with the matter, reported that the acquisition values Aza Finance at approximately $150 million.
Intriguingly, dLocal's acquisition strategy often deviates from traditional equity stakes. According to an insider familiar with their approach, dLocal frequently structures deals around transaction volumes, investing in businesses through a combination of upfront cash payments and revenue-sharing agreements. This allows the company to capitalize on the acquired firm's payment flows without assuming full operational control, a model that could prove particularly effective in fast-growing, yet diverse, emerging markets.
This acquisition marks a crucial step in dLocal's broader strategy to expand its global footprint. Having largely dominated the Latin American market, the company has increasingly turned its attention to the burgeoning economies of Asia and Africa. The integration of Aza Finance will grant dLocal access to critical African markets where it currently lacks a presence, including Botswana, Mozambique, and Guinea. Aza Finance boasts operations in 17 African countries, complementing dLocal's existing support for local payment processing in 13. Conversely, Aza Finance stands to significantly benefit from gaining access to dLocal's extensive global merchant network.
The dLocal-Aza Finance deal is not an isolated event but rather indicative of a broader trend of consolidation within the African fintech ecosystem. The continent has recently seen a flurry of acquisitions as companies vie for market share and enhance their service offerings. For instance, January witnessed Nigerian fintech LemFi acquiring Irish currency exchange platform Bureau Buttercrane, and South African fintech startup Stitch, a provider of online payments infrastructure, acquiring ExiPay. These moves highlight the increasing maturity and attractiveness of the African fintech landscape for both regional and international players.
Pedro Arnt, dLocal's CEO, had hinted at such strategic moves earlier this year. In a January interview, Arnt revealed that the company was actively considering acquiring a smaller fintech rival, even after dLocal itself had been the subject of takeover proposals. Arnt maintains a bullish outlook on the emerging markets payments industry, believing it possesses sufficient scale to propel valuations back north of $20 billion, provided dLocal can sustain its leadership position.
Aza Finance, founded in 2013 by Elizabeth Rossiello, holds a significant place in the history of African fintech. Initially operating as BitPesa, it was among the continent's pioneering cross-border remittance startups. The company's early innovation leveraged Bitcoin and blockchain technology to facilitate more efficient and cost-effective cross-border payments in sub-Saharan Africa. By enabling Bitcoin-based transfers, BitPesa aimed to circumvent the high costs and inefficiencies associated with conventional banking channels for remittances.
Rossiello expressed her excitement about the acquisition on LinkedIn, stating, "What began as a small team with a big vision has grown into a platform trusted by our amazing clients and partners across the continent. And today, I’m thrilled to share a major milestone in our journey: We’ve announced today that, pending regulatory approval, we’ve agreed to be acquired by dLocal!”
As the company matured, it recognized the imperative to diversify its offerings beyond purely cryptocurrency transactions. This strategic evolution led to the 2019 rebranding as AZA Finance, a move that reflected its transformation into a comprehensive digital foreign exchange and payment platform. This rebranding marked a deliberate shift towards providing a full suite of FX and payment services across major African and G20 currencies.
To further fuel its growth, AZA Finance also secured $15 million in debt financing from the Development Bank of Southern Africa. Over the years, Aza Finance has demonstrated remarkable growth, managing over $2 billion in global transactions for a diverse clientele, including SMEs, global organizations, and companies from over 115 countries. Its growth trajectory has also included strategic acquisitions, notably the Spanish remittance company TransferZero in 2018 and the South African cross-border payment firm Exchange4Free in 2021.
The acquisition of Aza Finance by dLocal is poised to create a formidable force in the global cross-border payments landscape, particularly in emerging markets. It signifies a continued trend of consolidation and strategic expansion as fintech companies vie for dominance in an increasingly interconnected global economy.