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Opay at $2bn Valuation Now Bigger than all Nigerian Banks

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SoftBank Vision Fund 2 last week led a $400 million funding round for OPay, valuing the Nigerian mobile-payments platform at $2 billion and marking the investment vehicle’s first bet in Africa.

The $2billion or N824 billion valuation (using the closing I&E window rate of $1/N412) now means that Opay is bigger than all Nigerian banks, a remarkable feat given that the company is barely 3 years old.

The largest Nigerian bank is GT Holding company which had a market capitalization of N818.19 billion as at Friday August 27.

This is followed by Zenith Bank at N766 billion, Stanbic IBTC N531.2 billion, Access N319.9 billion, FBN Holdings N269.21 billion, United Bank for Africa (UBA) N254.78 billion, Union Bank N148.5 billion, Fidelity N69.53 billion, and FCMB N59.4 billion.

In a sense Nigerian banks partly have themselves to blame for the current state of affairs. Long shielded by regulation that caused major barriers to entry they have been slow to embrace and adapt to innovation coming from the fintech space.

They have largely also failed to appeal to the needs of young people who are often without means of identification to open formal ban accounts or are not in formal employment to be able to access loans.

Sequoia Capital China, DragonBall Capital, the venture arm of Chinese food-delivery giant Meituan, Redpoint China, Source Code Capital, SoftBank Ventures Asia and 3W Capital, also participated in the round according to OPay.

“We want to be the power that helps emerging markets reach faster economic development,” OPay Chief Executive Officer Yahui Zhou said in an emailed statement.

The company’s technology is designed to replace cash and other legacy payment methods, helping local governments “improve financial and information security,” according to OPay.

Founded in 2018, the company’s monthly transaction volumes exceed $3 billion. In addition to expanding in other African countries, OPay is focused on the Middle East as well, it said.

“We believe our investment will help the company extend its offering to adjacent markets and replicate its successful business model in Egypt and other countries in the region,” said Kentaro Matsui, a SoftBank Group Corp. managing director and former managing partner at SoftBank Investment Advisers, which oversees Vision Fund and Vision Fund 2.

OPay previously counted ride-hailing and logistics services as part of its offerings. Last year, OPay closed its ride-hailing and bike-sharing businesses following a government ban and the rise of the Covid-19 pandemic.

Norway’s Opera Ltd., which counts Zhou as its chairman and co-CEO, said in June that it sold 29% of its stake in OPay, recording a $31.1 million gain. Zhou is the billionaire founder of Kunlun Tech Co., which last year sold dating app Grindr under U.S. regulatory pressure due to national-security concerns.

Earlier this month, SoftBank’s billionaire founder Masayoshi Son said he’d begin to invest personally alongside Vision Fund 2, to which SoftBank has committed $40 billion.

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