Kaspi, Kazakhstan’s largest financial technology firm, has signed a purchase agreement to buy Ukraine’s subsidiary of Kazakh BTA Bank, according to the company’s financial statement published on Oct. 25.
Kaspi expects to finalize the purchase in the first quarter of 2022 for an undisclosed amount.
The transaction could cost up to $9 million, according to the managing partner of one of the Ukrainian financial companies familiar with the transaction details, Forbes Ukraine reported.
Kaspi will buy BTA Bank to obtain a banking license in Ukraine, opening the door to launch its financial services in the country, including open mobile wallets and banking accounts, according to the company’s statement.
BTA Bank is a relatively small bank. Its total assets account for $20 million, among the lowest in Ukraine. By comparison, Ukraine’s Alfa-Bank manages $4 billion of assets, while Universal Bank manages over $1.7 billion.
BTA Bank doesn’t have brick-and-mortar branches in Ukraine and has not lent money for several years. According to Forbes, the bank lost $945,400 in 2020 and it’s looking for a new owner.
BTA Bank is Kaspi’s second purchase in Ukraine. In July, the company acquired Ukraine-based online payment service Portmone, a transaction estimated at $10-15 million by Ukrainian investors.
“Portmone gives us a solid starting platform in Ukraine with a National Bank of Ukraine payments license, Visa and Mastercard accreditation and relationships with thousands of merchants and a wide pool of banks,” Kaspi wrote.
With BTA Bank’s banking license and Portmone’s payments licenses, Kaspi could launch its Super App financial service in Ukraine. Nearly 11 million people out of Kazakhstan’s population of 18.5 million already use this service.
With this mobile application, users can pay for utility bills, transport, internet and television, education, and health services; it also works as a marketplace, messenger, mobile bank and service for navigation in the city.
Kaspi could compete with Ukraine’s first mobile bank Monobank and e-commerce platform Rozetka by combining financial technology services and electronic commerce.
According to Oleg Gorohovsky, the founder of the Ukrainian online payment service Monobank, Kaspi will face tough competition in Ukraine.
Kaspi’s online payment service will vie against the free-of-charge Monobank. Its acquiring services, allowing restaurants or supermarkets to accept card payments, will compete with PrivatBank, Apple Pay and Google Pay.
“I hope Kaspi will be able to show its best. But it will be incredibly difficult,” said Gorohovsky.
Besides, the Ukrainian government overregulates bank acquisition, making it hard to build an e-commerce business, Gorohovsky said.
Kaspi went public in 2020 with a valuation of $6.5 billion. As of October, the company’s market capitalization went up to $23 billion, a valuation used to expand in Eastern Europe and further.
“It makes sense to invest money raised during the IPO in expansion to other regions,” said Sergey Vatilik, CEO of the online payment system Wayforpay in an interview with the Kyiv Post in July.
For Kaspi, Ukraine is a massive market because Ukrainians still use a lot of cash and online sales are just 8% of total retail sales, according to Kaspi’s analysis.
“The acquisition of Portmone puts our payments platform in a strong position to end up in Ukraine,” the company wrote. With its 212,000 tech specialists, Ukraine is also an essential source of IT talent and a development hub for Kaspi.
