Why Africa’s most valuable unicorn is no closer to an IPO - CEO

KIGALI, Rwanda — A long-anticipated initial public offer by Africa’s most valuable tech unicorn is no closer to reality as its CEO said it is focused on business development deals.

“Obviously we have plans to do that but currently our goal is deepening market penetration, getting our customers where they want to be across the continent,” Olugbenga ‘GB’ Agboola, chief executive of Lagos-based Flutterwave said in an interview with Semafor Africa. He said plans for a public offering, which the company first acknowledged last August, had seen it overhaul its executive team with key hires including new chiefs of finance and technology.

Flutterwave offers software for businesses to collect card or bank transfer payments online. The company, founded in 2016, has ridden hundreds of millions of dollars in investments by large firms like the U.S. firm Tiger Global, Visa, and B Salesforce Ventures to a private valuation of $3 billion last year. Part of its success as a business is built on long-term relationships with big clients like Uber. Flutterwave is the ride-hailing company’s online card payments processor wherever it sets up in Africa.

So far this year, Flutterwave has said it will use Microsoft’s Azure cloud platform to support its payments processing business, and started offering a payment by bank transfer feature for African vendors doing business with UK and European Union customers. The company said it received two new licenses in Rwanda, one of which will enable it to offer cross-border money transfers in the country.

Talk of a Flutterwave IPO started to heat up last year when it hit its peak valuation. That talk picked up pace when it hired a new, more seasoned, finance team to tighten controls especially as it kept running into operational issues and having to answer serious questions about the management.

But Flutterwave’s investors missed a particularly fertile public offer window which peaked with the Coinbase offering in April 2021 that saw the digital currency exchange valued at $86 billion. Since then inflation, rising interest rates, and fears of a recession, among other factors, have deflated the market. Money raised from tech IPOs reduced by 94% in 2022 from the year before.

One of the challenges to Flutterwave’s IPO ambitions has been a series of damaging reports of mismanagement by senior staffers. It has also had to take on a combative regulatory environment around the continent, including having its accounts frozen in Kenya following multiple allegations of fraud in its systems.

Agboola, one of the architects of a blacklist project between Nigerian fintech companies to fight fraud, described the problem as inevitable: “You can’t run a payments company if there’s no fraud, unless someone is lying to you. Bad actors sometimes will pass all [know your customer] procedures.” The anti-fraud project is still at infancy, he said, but is necessary to stop the spread of bad actors

It’s important to understand how sector-affirming a successful Flutterwave IPO on New York’s Nasdaq would be for the wider African tech ecosystem for founders, tech workers, and especially investors, small and large. This is why Agboola will keep having to face questions about Flutterwave’s offering plans for as long as it hasn’t gone public. On the basis of its outsized share of attention and record-breaking valuation, Flutterwave has become to African tech what large American or European banks are to the global financial system: too big to fail.