OPay Valued at $2B in $400M SoftBank-Led Funding Round

OPay Secures $400 Million Funding, Reaching $2 Billion Valuation

Fintech firm OPay, with strong backing from Chinese investors and a focus on the African market, has successfully completed a new funding round of $400 million. This investment was spearheaded by SoftBank Vision Fund 2, as reported by Bloomberg on Monday.

Investor Participation

The financing round represents SoftBank Vision Fund 2’s inaugural investment in an African startup. Existing investors, including Sequoia Capital China, Redpoint China, Source Code Capital, and Softbank Ventures Asia, also contributed significantly.

Furthermore, participation extended to DragonBall Capital and 3W Capital, bolstering the new financing initiative.

Funding Timeline and Significance

This latest development follows reports from The Information three months prior, indicating potential fundraising “up to $400 million at a $1.5 billion valuation” from Chinese investors.

It also builds upon two previous funding rounds secured by OPay in 2019 – a $50 million round in June and a $120 million Series B round in November. This Series C round is now the largest recorded in Africa’s technology sector, matching Jumia’s substantial raise in 2016.

Company Vision and Early Focus

According to a statement from OPay CEO Yahui Zhou, the company aims “to be the power that helps emerging markets reach a faster economic development.” Founded in 2018, OPay initially concentrated its operations exclusively within Nigeria.

Initially, the company sought to provide affordable digital services encompassing mobility, logistics, e-commerce, and fintech. However, ambitions to create a comprehensive “super app” have not fully materialized.

Current Successes: Mobile Money and Payments

Currently, OPay’s mobile money and payment services are experiencing the most substantial growth. The company facilitates financial transactions for Nigeria’s unbanked and underbanked populations, enabling them to send and receive funds and settle bills through an extensive network of agents.

This approach has fueled exponential growth for OPay.

Competitive Landscape and Market Potential

OPay operates within a highly competitive fintech market. Nigeria, as Africa’s most populous nation, presents a significant opportunity due to its large unbanked and underbanked population, making fintech the most promising digital sector in the country.

This trend extends across the entire African continent, where mobile money services have long addressed the needs of those without traditional banking access. GSMA data indicates that Africa had over 160 million active mobile money users, generating more than $495 billion in transaction value last year.

Transaction Growth and Market Share

Opera, OPay’s parent company, reported a 4.5x increase in monthly transactions, exceeding $2 billion in December of the previous year.

OPay also asserts that it processes approximately 80% of bank transfers among mobile money operators in Nigeria and 20% of the nation’s nonmerchant point of sales transactions. The company also secured an international money transfer license and is developing a partnership with WorldRemit.

Bloomberg reports that the company’s current monthly transaction volumes surpass $3 billion.

Expansion into New Markets

Last year, OPay expanded its operations to Egypt, positioning this as a gateway to the Middle Eastern market.

SoftBank’s Perspective

Kentaro Matsui, a managing director at SoftBank Group Corp, stated, “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.”

Growing Investor Interest in African Fintech

SoftBank’s investment adds to a growing trend of significant investors – including Dragoneer, Sequoia, and SVB Capital – making initial investments in African ventures this year. Fintech continues to be a leading sector attracting investment on the continent.

Approximately half of the total investments raised this year have originated from the fintech sector, a substantial increase from the over 25% contribution observed last year.

OPay’s Position as a Unicorn

OPay’s recent funding round is the largest in terms of both size and valuation, establishing it as the second African fintech unicorn, following Flutterwave.

These three companies – OPay, Flutterwave, and e-commerce giant Jumia – comprise the five billion-dollar tech companies currently operating on the African continent, alongside Interswitch and Fawry.