Bank Zero, the innovative digital mutual bank, is set to be acquired by Lesaka Technologies for R1.1 billion, according to an announcement by Bank Zero chairman and co-founder Michael Jordaan. The acquisition is pending necessary regulatory approvals.
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Bank Zero, co-founded seven years ago by Michael Jordaan, banking innovator Yatin Narsai, and five others, officially launched in 2021 after its registration with the South African Reserve Bank in 2018. The bank, which is 45% black-owned and 20% women-owned, aimed to offer low-cost personal and business banking services through a fully digital model, accessible via its Android and iPhone app with no physical branches. It relies on IBM Z mainframe computers and LinuxONE for a secure, data-breach-resistant platform.
Unlike some major banks that have introduced similar low-cost digital accounts, Bank Zero adopted a distinct strategy. Built for efficiency from the ground up, it avoided aggressive marketing. Instead, its initial focus was to prove its unique, problem-solving concept, particularly its patented card designed to be immune to fraud and phishing. This approach, the bank noted, attracted a significant number of businesses and high-income earners, as well as digitally savvy customers seeking fraud-resistant yet straightforward solutions.
Bank Zero reported continuous growth, with year-on-year increases exceeding 50% in deposits, card purchases, and electronic fund transfers. The bank recorded approximately R400 million in deposits, and card spending reached R415 million across its customer base for the year ending December 2024. Despite not growing as rapidly as competitors like Discovery Bank and TymeBank, Bank Zero stated it was “tracking ahead of plan with expected break-even by 2027,” aiming to achieve it even sooner.
The acquisition will be settled through a combination of newly issued shares and up to R91 million in cash. Bank Zero shareholders will hold approximately 12% of Lesaka’s shares.
Following the acquisition, Michael Jordaan will remain chairman of Bank Zero and join the Lesaka Board of Directors. Yatin Narsai will continue in his role as CEO of Bank Zero, and the existing management team will remain intact.
Lesaka Technologies, formerly Net1, is a South African financial technology company listed on both the NASDAQ and the Johannesburg Stock Exchange (JSE). The company, headquartered in Johannesburg, focuses on financial inclusion, providing services to previously underserved communities and merchants.
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Lesaka has been on an aggressive acquisition spree in recent years. This includes the purchase of Touchsides, a platform-as-a-service and software-as-a-service provider, and the $85 million acquisition of Cape Town-based payment platform Adumo in May 2024. The company underwent a significant strategic redefinition in 2020 after an R580 million investment from Value Capital Partners, leading to a new board and management. In 2021, Chris Meyers became CEO, and a year later, Net1 rebranded as Lesaka Technologies, which coincided with its R3.7 billion acquisition of the Connect Group.
The acquisition of Bank Zero is expected to strengthen Lesaka’s balance sheet, allowing the group to finance lending growth through customer deposits. This move is projected to drive stronger lending unit economics and could lead to a reduction of more than ZAR 1.0 billion in Lesaka’s gross debt once the transaction and regulatory approvals are complete.
The proposed transaction requires customary closing conditions and regulatory approvals, including those from the Prudential Authority (a division of the South African Reserve Bank), the Competition Commission, and Exchange Control.
