Experian PLC (LON:EXPN) is expanding in Africa with the around US$263mln acquisition of Compuscan (CSH Group (Pty) Limited), one of the leading credit bureau and information services businesses on the continent, just weeks after getting a knockback over US acquisition plans.
The FTSE 100-listed global information services group said it has agreed to acquire 100% of Compuscan for a cash consideration of R3,720mln, which is expected to be funded from existing cash resources
Founded in 1994, Compuscan is one of the leading providers of credit information and decision analytics in South Africa, with operations across seven key geographies in Sub-Saharan Africa, Experian said. Compuscan also provides marketing services and has recently launched a free credit report service for consumers.
Experian noted that Compuscan holds credit information on 26 million people and 200,000 businesses in South Africa, representing approximately 56% of the population.
The group noted that Experian customers in South Africa are mainly large financial institutions and telecommunications operators, while Compuscan is positioned in the dynamic microlending space, as well as in the retail and insurance sectors.
Big boost to African revenue
For the year ending 31 December 2018, Compuscan is expected to generate revenues of R489mln (US$35mln), growing to R532mln (US$38mln) in the year ending 31 December 2019. That compares to Experian revenues in South Africa of around US$40mln.
The company said it expects the transaction to be accretive to Experian’s benchmark earnings per share in its first full year of ownership.
Brian Cassin, Experian’s chief executive officer said: “We have a long track record of investment in South Africa, where for many years we have helped businesses thrive through the provision of credit data and decisioning tools.”
He added: “This is an important transaction for our business in South Africa and will provide opportunities more broadly across the African continent.”
The group said, subject to approval by the Competition Commission in South Africa, the deal is expected to complete during the first quarter ending 31 March 2020.
The African expansion move comes just weeks after the UK competition watchdog said Experian’s proposed £275mln takeover of US credit score rival ClearScore could hurt competition, stifle product development and impact customers.
The Competition and Markets Authority (CMA) referred the deal for an in-depth Phase 2 investigation in July after highlighting concerns that it could have a negative impact on the services provided to customers.
Experian said it was disappointed by the findings and would continue to engage with the CMA over the coming weeks to address concerns ahead of the regulator’s final report into the deal early next year.
"We continue to strongly believe that the acquisition of ClearScore will have a positive impact on competition, allowing Experian to help more consumers with their finances by providing greater choice and convenience to them to access personal finance products at the best prices," the company added.