Lesaka buys prepaid electricity vendor for R507m

Formerly known as Net1 UPS, Lesaka is listed on the Johannesburg Stock Exchange as well as the Nasdaq.

Recharger is a South African prepaid electricity submetering and payments business with a base of over 460 000 registered prepaid electricity meters.

It enables landlords to collect payment for utilities usage from tenants in advance, eliminating the need to manage billing and collections.

This model further provides tenants with the ability to manage their utility usage and payments directly, providing them with greater control over cost.

The Recharger deal sees Lesaka continue with its acquisitive trail after it recently bought payments services provider Adumo in a R1.59 billion ($85.9 million) deal.

Commenting on the Recharger acquisition, Naeem Kola, COO of Lesaka, says: “This is an exciting addition to our fintech platform, adding scale to our enterprise pillar and bringing new revenue opportunities to Lesaka.

“The Recharger acquisition will facilitate us playing a larger role in the prepaid electricity vending and payments value chain, and fits well with our existing technologies and services in the enterprise pillar.”

The fintech firm notes the purchase consideration of R507 million ($28 million translated at the average exchange rate of $1: R18.06 as of 18 November 2024) will be paid over two tranches, with the first tranche settled at closing and the second tranche a year later.

It explains the purchase consideration will be settled through a combination of R332 million ($18 million) in cash and R175 million ($10 million) in shares of Lesaka common stock.

The share price applied to determine the number of shares of Lesaka’s common stock to be issued for the equity consideration will be based on the volume-weighted average price of Lesaka shares for the three-month period prior to the disbursal of each tranche.

Lesaka will also make a R43 million ($2 million) contribution to Recharger at closing, which will be used exclusively to repay a loan due by Recharger to the seller.

The company expects the transaction to be concluded at an EV/EBITDA multiple of approximately six times.

Lesaka believes the acquisition will act as an entry point into the South African private utilities space, while augmenting its enterprise pillar’s alternative payment offering.

The transaction is expected to close in Lesaka’s third quarter of fiscal 2025, and is subject to regulatory approvals and satisfaction of customary closing conditions.