FairMoney, a Paris-based digital bank operating in Nigeria, is engaged in early discussions to fully acquire fintech startup, Umba, in an all-stock deal worth $20 million.

The potential deal would expand FairMoney’s footprint into Kenya, Umba’s secondary market beyond Nigeria. It also aligns closely with the $20 million Umba has raised from investors to date.

Neither company has publicly commented on the acquisition talks, which sources say remain in initial stages.

Founded in 2018, Umba operates as a digital credit-led bank offering loans, accounts, payments and other financial services in Nigeria and Kenya. Investors include Costanoa Ventures, Monzo co-founder Tom Blomfield and others.

The deal would give FairMoney quick entry into Kenya by leveraging Umba’s existing infrastructure and newly acquired microfinance license rather than going through lengthy licensing procedures.

FairMoney, founded in 2017, has over 6 million customers for its lending and expanded offerings like debit cards and transfers. The Nigeria-focused fintech has looked to growth opportunities having entered India in 2020.

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Last year, FairMoney acquired Nigerian payments startup PayForce in a deal worth around $15-20 million. CEO Laurin Hainy said the move brought synergies between merchants and retail.

Fintech mergers are increasing amid VC funding tightening in Africa. FairMoney’s interest in Umba matches this consolidation trend as startups look to scale through strategic deals.

While not actively seeking a sale, Umba may find the offer compelling given its recent financials and struggle to attract additional investment. The deal would mark FairMoney’s second acquisition in two years.