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Kuda Raises Fresh $10m Seed Investment

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Kuda Nigeria

 By Adedapo Adesanya

Nigerian-based digital bank, Kuda, has announced securing $10 million in seed investment and the investors who participated in this round include Berlin-based VC, Target Global, who is the lead investor; Entrée Capital and SBI Investment.

Other notable angel investors participated including Oliver and Lish Jung who invested in Nubank, Revolut, and Chime—other mobile challenger banks in Brazil, the UK and US.

At the time Kuda closed its $1.6 million pre-seed round in September 2019, it was said to have arguably raised the highest pre-seed round for a Nigerian startup.

Founded in 2016 by Babs Ogundeyi and Mustapha Musty as Kudimoney, the startup launched as a lending platform before transitioning into a digital-only bank after receiving a banking license from the Central Bank of Nigeria (CBN) in June 2019.

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Without a physical location, Kuda allows users to make airtime purchases, access bill payment options, manages their payments and transfers, in addition to issuing free debit cards and allowing free account opening online.

The company previously had strategic partnerships with three West African banks — Guaranty Trust Bank (GTB), Access Bank and Zenith Bank.

This was done to give users access to Kuda debit cards and enable them to make physical deposits as well as withdrawals via these banks.

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“We have built the core banking services in-house so we own the full stack. It means we don’t have to piggyback on another financial institution. We may choose to partner on certain products but we don’t have to.

“As a bank, you need to be able to lend, and in Nigeria, if you don’t have a full license it’s hard to lend and make money,” he said.

The startup now has more than 300,000 customers—both individual consumers and small businesses—using its platform while processing over $500 million worth of transactions monthly.

Speaking on the deal, Mr Ricardo Schäfer, partner at Target Global, noted that digital challenger banks like Kuda are providing users with a better banking experience than traditional banks.

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He noted that this was the reason the VC firm decided to be the lead investor in this round.

“Kuda is one of Africa’s leading digital challenger banks and one of the fastest-growing fintechs on the continent.

“We are very excited to be working with Babs, Musty and the entire Kuda team to further build on the fantastic momentum they have had since inception and support them in taking the company to the next level,” he said.

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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Banking

London Stock Exchange Lists Ecobank $350m Sustainability Bond

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ecobank retail bank

By Aduragbemi Omiyale

The $350 million sustainability bond issued by Ecobank Transnational Incorporated (ETI), the parent company of the Ecobank Group, has been listed on the main market of the London Stock Exchange (LSE).

The green bond was admitted on the LSE on Wednesday at a virtual ceremony to open the market for the trading day and celebrate the successful listing of the tier-2 environment-friendly notes, the first by a financial institution in Sub-Saharan Africa.

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The bond, which matures in June 2031, has a call option in June 2026 and was issued with a coupon of 8.75 per cent with interest payable semi-annually in arrears.

An equivalent amount of the net proceeds from the notes will be used by Ecobank to finance or refinance new or existing eligible assets as described in the bank’s Sustainable Finance Framework.

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The tier-2 issuance is the first to have a Basel III-compliant 10NC5 structure outside of South Africa in 144A/RegS format.

It was gathered that investor interest for this sophomore Eurobond issue was global, including the United Kingdom, the United States, Europe, the Middle East, Asia and Africa, achieving a 3.6x oversubscribed order book of over $1.3 billion at its peak.

The joint lead managers and book runners in the transaction were Citi, Mashreq, Renaissance Capital and Standard Chartered Bank.

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“The strong global interest in our issuance reflects investors’ confidence in Ecobank’s strategy and our commitment to sustainable financing.

“We thank the LSE for hosting ETI today and look forward to value creation for all our stakeholders,” the Group CEO of Ecobank, Mr Ade Ayeyemi, said.

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Banking

CBN’s Digital Currency Will Deepen Financial Inclusion—FDC

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Summon CBN Governor

By Adedapo Adesanya

Financial Derivatives Company (FDC) Limited has lauded the proposed plan by the Central Bank of Nigeria (CBN) to introduce a digital currency, saying it will deepen financial inclusion in the country.

In a new report, FDC explained that most central banks had indicated keen interests in developing their digital currencies in response to the threats and limitations of cryptocurrency, including poor regulation, price volatility and facilitating illicit financial transactions.

The report said, “Nigeria is set to follow the global trend as it plans to launch its digital currency by year-end. Unlike crypto, digital currencies are regulated by central banks, thus giving them some level of control over the financial system.

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“On a positive note, virtual currencies would facilitate smooth financial transactions and eliminate bottlenecks associated with the use of cash (mutilated notes, forgery, cash handling charges, shortages). It will also deepen financial inclusion and increase the velocity of circulation.”

The analysis highlighted the rising concerns of distrust in the government and its policies, cybersecurity and inadequate digital infrastructure.

“All these could limit the launch and widespread use of the digital currency in the country,” it said.

According to the report, the drop in inflation rate in May for the second straight month contradicts market reality following the report by the National Bureau of Statistics (NBS) which disclosed that the country’s inflation rate fell to 17.93 per cent in May from 18.12 per cent in April.

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FDC said contrary to analyst expectations, the decline in consumer price inflation seemed to be more of a trend than a blip.

It said the headline inflation fell again in May primarily due to a fall in the food sub-index to 22.28 per cent from 22.72 per cent in April.

This is coming as the CBN last year issued a circular asking commercial banks and other financial institutions to close accounts transacting in, or operating on, cryptocurrency exchanges.

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All deals involving cryptocurrency are now prohibited with severe regulatory sanctions awaiting erring outfits.

The apex bank also asked commercial banks to identify persons and or entities transacting in or operating cryptocurrency exchanges within their systems and ensure that such accounts are closed immediately.

But since the apex bank announced its intention to introduce a digital currency for the country, it has been applauded.

Apart from the FDC, other analysts have submitted that the proposed CBN’s digital currency would benefit the nation, especially as the digital asset is becoming widely accepted across the globe.

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Banking

CIBN to Revamp Banking Practice in Nigeria With A-TEAM Initiative

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CIBN A-TEAM Initiative

By Aduragbemi Omiyale

A strategic initiative aimed to revamp banking practice in Nigeria has been introduced by the Chartered Institute of Bankers of Nigeria (CIBN).

The new plan with the acronym A-TEAM means Accelerated Development; Technology and Digital Enhancement; Engagement for Growth; Accountability and Transparent Leadership and Membership Drive for Value.

As part of efforts for its successful implementation, the CIBN is seeking collaborations with financial institutions in the country.

Recently, the President/Chairman of Council, CIBN, Mr Bayo Olugbemi, visited Ecobank Nigeria and he said the A-TEAM initiative will benefit stakeholders in the banking sector.

He applauded Ecobank’s consistent support for the institute over the years to ensure the realisation of its mandate of determining the standards of knowledge and skills development for those seeking to become members of the banking profession.

“We applaud Ecobank Academy as the first corporate member to become a member of the Global Business School Network and for the consistent support for the realisation of the institute’s mandate of determining the standards of knowledge and skills to be attained by persons seeking to become members of the banking profession.

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“We, therefore, seek Ecobank’s collaboration and enlistment in our Endowment/Prize Awards in any subject of interest; support towards the renovation of Abuja Bankers’ House; support for the establishment of banking museum by donating artefacts and other relevant materials; and to participate actively in training programmes of the institute,” Mr Olugbemi said.

Further, he congratulated Ecobank Nigeria and the Ecobank Group on winning several International awards, which includes the Best Retail Bank in Nigeria by Asian Banker; Africa’s Best Bank for Corporate Responsibility by Euromoney (Ecobank Group); African Bank of the Year (African Banker); Innovation in Financial Services Award from African Banker (Ecobank Group); EMEA Finance African Banking Awards 2020.

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Responding, the Managing Director of Ecobank Nigeria, Mr Patrick Akinwuntan, pledged more support and collaboration with the institute, restating that Ecobank will continue to contribute to the efforts of the organisation to become top class and remain relevant globally.

“For us at Ecobank, we are extremely proud CIBNs efforts at ensuring public discourse on the future of the Nigeria economy and the banking and finance industry.

“This is not in isolation of the ethics, professionalism, accountability, transparency, good corporate governance without losing focus of harnessing the opportunities technology has provided in the new world order. Be assured of our maximum support and collaboration at all times,” he said.

Mr Akinwuntan also identified with the efforts of the institute to raise the bar of competency and capacity building in the industry, stressing that with sound professional conduct, every banker will be held in high esteem.

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He said Ecobank was working assiduously to ensure a majority of its staff become members of the institute, adding that the bank will also provide more mentees and mentors in its mentorship programme.

“We have a medium to long term programme to ensure all Ecobank Nigeria staff become chartered members of the institute.

“At Ecobank, we take human capacity development very seriously. Some of our staff that wrote the last examinations are now chartered members of the Institute.

“We will also ensure bulk subscription of our staff. We will be nominating 30 mentors and 100 mentees to participate in the second mentorship programme,” he assured.

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