Net1 acquired a 70 percent equity stake in Liechtenstein-based Bank Frick. The acquisition is a milestone in Net1’s European expansion plan and an opportunity to build up its Fintech offering including products and services in the blockchain and crypto space.

Net1 is no stranger at Bank Frick. The South-African tech firm had bought a minority stake in the bank in late 2016. As per the recent announcement, it has now exercised an option to buy shares worth 46 million Swiss francs ($46 million) to take a 70 percent controlling stake in the bank. At this point, the transaction is still subject to approval from the Liechtenstein Financial Market Authority and is expected to close in March 2020.

30 percent will remain with the Kuno Frick Foundation. Both Mario and Roland Frick will keep their seats on the board and the executive team led by Edi Woegerer will stay as well.

Mario Frick said, “With the combination of Bank Frick and Net1, we will be able to strengthen our current business areas, drive forward our fintech strategy, develop new digital business models and roll them out across Europe. Together we bring the reliability of the classic banking system, with the new opportunities offered by digitization and blockchain technology.”

Net1 plans to expand its financial product offerings

Net1 is a payments system specialist based in Johannesburg, South Africa. It is a leading provider of transaction processing services, financial inclusion products and services, and secure payment technology. The company is operating in South Africa and the Republic of Korea and has a primary listing on NASDAQ (NasdaqGS: UEPS) as well as a secondary listing on the Johannesburg Stock Exchange (JSE: NT1).

Besides Bank Frick, Net1 also holds a 26 percent equity stake in Finbond Group Limited, or “Finbond”, a South African company that has a mutual  banking license in South Africa and owns certain state lenders in the U.S. With its strategic equity investments in banks, Net1 aims at introducing a wider range of financial products and technologies.

Acquisition a stepping stone to enter the European market

The investment in Bank Frick is seen as a stepping stone to enter the European market. Herman Kotzé, CEO of Net1, says, “Bank Frick provides the cornerstone of our European strategy to deliver all-encompassing financial technology and banking services to SMEs in the region.”

Apart from geographical considerations, Net1 also intends to leverage Bank Frick’s Fintech expertise, in particular regarding blockchain- and crypto-products. That will be one reason why it has chosen not to change the current executive team that has turned the bank into a significant player in Europe’s blockchain industry over the past years.

“The bank’s strong CHF 90 million Tier 1 capital, Visa and MasterCard memberships, pan-European universal banking license and recognized leadership in banking services, especially to the virtual financial assets / crypto industry will meaningfully increase the breadth, scale and speed of complementary offerings of both Net1 and Bank Frick’s fintech business,” said Kotzé. Net1 expects the acquisition to pay off by 2021.

The recent string in a number of foreign buyouts

Bank Frick follows several other Liechtenstein-based banks that have sold equity stakes to foreign buyers in recent years. Raiffeisen private bank Liechtenstein was sold to Hong Kong’s Mason Group in 2017. Hong-Kong-based firms Citychamp Watch and Jewellery Group bought Valartis Bank Liechtenstein in 2016, and the Swiss-Iranian businessman Yousef Sherkati controls Alpinum Bank.

Liechtenstein’s membership in the European Economic Area makes Liechtenstein-based banks attractive to foreign buyers. The location provides market access to the European continent, which means businesses can distribute their products and services throughout the EU.

Image: ©BankFrick