Only three months after its formation on August 19, financial technology (fintech) investment group M-FiTEC International has listed on the JSE’s AltX, under the board’s specially designated special purpose acquisition company (Spac), through which it planned to raise up to an initial R360-million by way of a private placement.

The private placement would see a subscription price of R10 per ordinary share, with a minimum of 50 000 ordinary shares for individuals and a further 500 000 ordinary shares for institutions.

Spacs were a publicly traded acquisition companies that used the money raised to finance the acquisition of operating companies within a 24-month period, allowing investors to co-invest with an experienced board of directors in a private equity-like investment, with downside protection.

While new to the Johannesburg bourse, Spacs had been widely used in the US, the UK and, more recently, in Canada.

Newly formed M-FiTEC International planned to adopt a “buy and build” strategy that would see it acquiring controlling stakes in innovative fintech companies in sub-Saharan Africa and emerging States that provided technology-based solutions and services to existing and emerging financial institutions and their clients.

This as JSE capital markets director Donna Oosthuyse revealed during an event at the JSE on Monday to celebrate the group’s addition to the bourse that global investment in fintech companies had swelled from $1-billion in 2008 to $12-billion in 2014.

M-FiTEC CEO Charles Rowlinson told Engineering News Online on the sidelines of the listing event that the company’s acquisition criteria would see it targeting companies that could offer a potential return on investment of at least 25%, as well as those that were well established and had a strong revenue and profit history, a referenceable client base, favourable free cash flow margins and hard currency revenue potential.

Targeted companies would also be expected to own intellectual property (IP) or exclusive distribution relationships with providers, while occupying a strong competitive position within the relevant industry and geography.

Companies should already have an offer enterprise value of between R20-million and R200-million and have existing revenue, clients and IP.

“We’re looking primarily in the emerging markets, such as South America and Africa, as there are at least two-billion unbanked people in these regions. M-FiTEC directors understand fintech and the need to support entrepreneurs, while removing corporate red tape.

“M-FiTEC has a strong need to bring financial services to all, making people’s lives easier, [as] regular banking models can’t provide financial access to all. Fintech is disruptive by nature. . .[and] it wants to change the status quo, which is an exciting space to be involved in,” said Rowlinson.

Noting that the addition of M-FiTEC to the AltX board constituted the nineteenth listing on the JSE this year, Oosthuyse added that the introduction of the Spac structure last year had seen considerable interest from private investors and entrepreneurs looking to invest in growth industries.

“M-FiTEC is moving into an industry that is high-growth and driven by important trends in the information technology sector. This is a unique company that can use the AltX board to incubate growth before moving to the main board," she advanced