For most of the past decade, a South African tech founder looking to sell had to hope a foreign buyer came knocking. That has changed – and it is the country’s banks doing the knocking.
Newly released research by the SA SME Fund, Endeavor South Africa and industry body Savca shows that domestic mergers and acquisitions – led by the banks – have emerged as a major exit route for venture capital-backed technology companies, alongside the international deals that once dominated.
Nedbank has bought payments fintech iKhokha in a R1.65-billion deal, Capitec has acquired WalletDoc, TymeBank swallowed SME lender Retail Capital and Lesaka Technologies took over payments group Adumo.
“Between 2015 and 2020, the businesses that exited were all sold to international companies – there was very little M&A activity from our local South African corporates,” said Endeavor South Africa MD Alison Collier at a briefing on the research. “That changed in the early 2020s. Now we’re seeing many more local corporates looking to acquire, both in fintech and other sectors.”
Karl Westvig, who founded Retail Capital and sold it to TymeBank in December 2022, said the shift reflects a deeper change in how the banks think about innovation. “The banks have been very monolithic in the past and decided they can do it all themselves – in some cases they bought tiny stakes to learn the model and did it in-house anyway. That’s shifting. We’re certainly seeing more JVs happening, more acquisitions happening.”
Trend will accelerate
He pointed to a partnership between Retail Capital and FNB – a bank that “traditionally hasn’t partnered a lot” – as evidence of changing momentum.
Westvig argued the trend will accelerate because of AI. Incumbent institutions are increasingly under threat, he said, because what they have built is becoming easier to replicate by AI-native start-ups with no legacy systems. “Incumbents either then have to partner, participate or buy.”
Collier said the fintechs have also simply reached the right size. A large organisation cannot buy a business that is very small and make a meaningful difference to itself, she said, and acquiring is often a cheaper way to innovate than building – provided the acquirer can manage the cost and complexity of integration.
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The domestic M&A wave is one finding in two studies arguing that South African venture capital is starting to deliver the thing it has long been accused of lacking: exits. An analysis of 226 realised exits reported by local fund managers between 2009 and 2026 found capital-weighted returns of 2.01 to 2.45 times invested capital – in line, the researchers say, with mature venture markets including the US, UK and Europe. About R16-billion has been invested in more than 1 100 companies over the past decade, with roughly 60% of exited investments making money.
A companion study of 18 successful exits found a median gross internal rate of return of 54%, a median return of 3.5 times capital and a median exit valuation of about R1.6-billion, with the companies creating more than 4 000 direct jobs. Those figures describe a hand-picked sample of winners, however, not the asset class as a whole.
Exit pathways are diversifying beyond M&A, too: secondary transactions of R2-billion to R4-billion are emerging, and Optasia’s R23.5-billion JSE listing last year showed public markets can provide an exit for African fintechs at scale. Mastercard’s pending acquisition of BVNK – at a valuation Collier put at around R30-billion – and Motorola Solutions’ purchase of RapidDeploy show the international route remains open.
The research has an unashamedly commercial purpose: persuading pension funds and other institutions to allocate to the asset class. Regulation 28 allows retirement funds to place up to 15% in private capital, an allowance that remains largely unused, and the SA SME Fund said it plans to raise a new R2-billion fund in the coming year.
The studies’ return figures are gross, however – asked at the briefing what investors received net of management fees and carried interest, the researchers conceded they had not done the calculation, though typically 80% of profits after capital is returned flow to investors.
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Still, said SA SME Fund CEO Ketso Gordhan, the evidence base matters. “These studies show that the exit market is no longer theoretical. It is starting to happen, and it is happening across different pathways.” – © 2026 NewsCentral Media
