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Tuesday, September 27, 2022

FACT CHECK: Is Flutterwave worth more than GTB, and Zenith Bank combined

Flutterwave got a new valuation after it was able to raise $250 million from a Series D funding round. The funding round sees the company’s valuation now stand at $3 billion, which makes the company Africa’s most valuable startup as of the time of this writing.

There is a lot of reactions, as a tweet raised eyebrow when someone dropped a tweet, comparing flutterwave to zenith, the twitter user claimed Flutterwave was worth more than Zenith, and GTCO combined. 

Intel Region investigation revealed a lot of attachment to this, is Flutterwave really worth more, or the 3Billion dollars valuation is just on paper?

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At $3 billion, using an exchange rate of N570 to one United States’ dollar, it means Flutterwave’s valuation is approximately N1.71 trillion. Because of its trillion-dollar status, we took a look at the Stocks Worth Over One Trillion (SWOOT) and when compared to these legacy organizations that have attained this feat, and listed on the Nigerian Exchange Group (NGX), it reveals that Flutterwave is more valuable than Nestle Nigeria, which currently has a market capitalization of approximately N1.14 trillion as at close of market on Thursday, February 17, 2022.

Looking at the tier-1 banks, the FUGAZ, asides from being more valuable than each of them individually, Flutterwave’s new valuation means the firm is more valuable than the two most valuable banks listed on the NGX, ZENITH and GTCO, combined.

As at October 2018 Flutterwave’s estimated annual revenue was $81.7M per year, that was 29billion naira in an exhange rate of 365naira per dollar when  a total funding of $484.7M.

That same year, Zenith Bank generated N630.34 billion in revenue, thats a huge gap using a data of three years ago,  Zenith Bank Valuation was 1.5trillion naira around that year, also more valuable than Flutterwave. 

However, a lot have changed.

Zenith bank and GTCO have a combined market capitalization of N1.62 trillion as of close of market on Thursday. It is also more valuable than FBNH, ACCESS and UBA combined. The trio have a combined market capitalization of N1.07 trillion as of close of market on Thursday.


According to Nairamtrics, the valuation also means that Flutterwave would rank #5 on the SWOOT list, making it the fifth most valuable company when compared to the companies listed on the NGX. Its valuation would also account for 6.74% of the total equity market capitalization of NGX which currently stands at approximately N25.4 trillion as of close of market on Thursday.

Flutterwave got unicorn status, which is a name given to companies valued at $1 billion, in March 2021, in a Series C funding round, where the firm was able to raise $170 million, led by Avenir Growth Capital and Tiger Global Management. Its latest funding round shows that the firm has tripled its valuation and this was led by B Capital Group and also saw participation from Alta Park Capital, Whale Rock Capital, Lux Capital among others while existing investors involved include Glynn Capital, Avenir Growth, Tiger Global, Green Visor Capital and Salesforce Ventures.

According to the organization, it has processed over 200 million transactions worth over $16 billion to date and serves more than 900,000 businesses including customers like Uber Technologies, Flywire, Booking.com, Alibaba’s Alipay and so on.

Data from NIBSS indicate total online transactions topped N6 trillion ($10.5 billion) in 2020 as Nigerians adoption of digital means of payments increased. However, there is no clear leader in online transactions and margins are quite low. For example, in 2020, Nairametrics reported top banks earned about N216 billion in e-business income without deducting fees and other associated costs of generating the income.

VERDICT: Flutterwave is more valuable than the two banks comibined, but will have to generate between $400-$600 million in profits, twice what the largest Nigerian bank makes as profits.

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