Published On: Mon, Feb 24th, 2020

Opera and a organisation short-selling the batch (alleging Africa fintech abuses) import in

Internet services association Opera has come underneath a short-sell attack formed on allegations of rapacious lending practices by a fintech products in Africa.

Hindenburg Research expelled a news claiming (among other things) that Opera’s financial products in Nigeria and Kenya have run afoul of advantageous consumer practices and Google Play Store manners for lending apps.

Hindenburg — that is formed in NYC and managed by financial researcher Nate Anderson — went on to advise Opera’s U.S.-listed batch was grossly overvalued.

That’s a authority on a pivotal info, yet there are several additional shades of a who, since and where of this story to mangle down before removing to what Opera and Hindenburg had to say.

A good start is Opera’s tenure and scope. Founded in Norway, a association is an internet services provider, mostly centered around a Opera browser.

Opera was acquired in 2016 for $600 million by a consortium of Chinese investors, led by stream Opera CEO Yahui Zhou.

Two years later, Opera went open in an IPO on NASDAQ, where a shares now trade.

Web Broswers Africa 2019 Opera

Though Opera’s web height isn’t widely used in a U.S. — where it has reduction than 1% of a browser marketplace — it has been No. 1 in Africa, and, some-more recently, a apart second to Chrome, according to StatCounter.

On a behind of a browser popularity, Opera went on an African try debauch in 2019, introducing a apartment of products and startup verticals in Nigeria and Kenya, with vigilant to scale some-more broadly opposite a continent.

In Nigeria these embody motorcycle ride-hail use ORide and smoothness app OFood.

Central to these services are Opera’s fintech apps: OPay in Nigeria and OKash and Opesa in Kenya — that offer remuneration and lending options.

Fintech-focused VC and startups have been during a core of a decade-long tech bang in several core economies in Africa, namely Kenya and Nigeria.

In 2019, Opera led a call of Chinese VC in African fintech, including $170 million in dual rounds to a OPay payments use in Nigeria.

Opera’s Africa fintech startup OPay gains $120M from Chinese investors

Opera’s fintech products in Africa (as good as Opera’s Cashbean in India) are during a core of Hindenburg Research’s brief and short-sell position. 

The crux of a Hindenburg news is that due to a disappearing marketplace share of a browser business, Opera has pivoted to products generating income from rapacious short-term loans in Africa and India during seductiveness rates of 365-876%, so Hindenburg claims.

The firm’s stating goes on to explain Opera’s remuneration products in Nigeria and Kenya are afoul of Google rules.

“Opera’s short-term loan business appears to be…in defilement of a Google Play Store’s policies on short-term and dubious lending apps…we consider this whole line of business is during risk of…being exceedingly curtailed when Google notices and eventually takes visual action,” a news says.

Based on this, Hindenburg suggested Opera’s batch should trade during around $2.50, around a 70% bonus to Opera’s $9 share cost before a news was expelled on Jan 16.

Hindenburg also disclosed a organisation would brief Opera.

Founder Nate Anderson reliable to TechCrunch Hindenburg continues to reason brief positions in Opera’s batch — that means a organisation could advantage financially from declines in Opera’s share value. The company’s batch forsaken some 18% a day a news was published.

On motivations for a brief, “Technology has catalyzed countless certain changes in Africa, though we do not consider this is one of them,” he said.

“This news identified issues relating to one company, though what we consider will shortly turn apparent is that in a deficiency of effective internal regulation, rapacious lending is apropos pervasive opposite Africa and Asia…proliferated around mobile apps,” Anderson added.

While a bulk of Hindenburg’s critique was centered on Opera, Anderson also took aim during Google.

“Google has turn a primary monitor of these rapacious lending apps by trait of Android’s prevalence in these markets. Ultimately, a wish is that Google stairs adult and addresses a bigger emanate here,” he said.

In a matter to TechCrunch a Google orator said: “Our Google Play Developer Policies are designed to strengthen users and keep them safe, and we recently stretched a Financial Services process to assistance strengthen people from false and exploitative personal loan terms. When violations are found, we take action.”

Google did not endorse if any specific movement would be taken per Opera’s fintech products in Africa.  

In a meantime, Opera’s apps in Nigeria and Kenya are still accessible on GooglePlay, according to Opera and a cursory crop of a site.

For a part, Opera expelled a come-back to Hindenburg and offering some submit to TechCrunch by a spokesperson.

In a association matter show said, “We have delicately reviewed a news published by a brief seller and a accusations it put forward, and a end is really clear: a news contains unsubstantiated statements, countless errors, and dubious conclusions per a business and events associated to Opera.”

Opera combined it had correct banking licenses in Kenyan or Nigeria. “We trust we are in correspondence with all internal regulations,” pronounced a spokesperson.

TechCrunch asked Hindenburg’s Nate Anderson if a organisation had contacted internal regulators associated to a allegations. “We reached out to a Kenyan DCI 3 times before announcement and have not listened back,” he said.

As it pertains to Africa’s startup scene, there’ll be several things to follow surrounding a Opera, Hindenburg affair.

The initial is how it might impact Opera’s business moves in Africa. The association is intent in foe with other startups opposite payments, ride-hail and several other verticals in Nigeria and Kenya. Being indicted of rapacious lending, depending on where things go (or don’t) with a Hindenburg allegations, could put a hole in code equity.

There’s also a open doubt of if/how Google and regulators in Kenya and Nigeria could respond. Contrary to some perceptions, fintech law isn’t self-existent in both countries; conjunction are regulators totally ineffective.

Kenya upheld a new data-privacy law in Nov and Nigeria recently determined discipline for mobile-money banking licenses in a country, after a extensive Central Bank examination of best digital financial practices.

Nigerian regulators demonstrated they are no pushovers with unfamiliar entities, when they slapped a $3.9 billion excellent on MTN over a regulatory crack in 2015 and threatened to eject a South African mobile-operator from a country.

As for short-sellers in African tech, they are a comparatively new thing, mostly since there are so few startups that have left on to IPO.

In 2019, Citron Research conduct and romantic short-seller Andrew Left — important for shorting Lyft and Tesla — took brief positions in African e-commerce association Jumia, after dropping a news accusing a association of bonds fraud. Jumia’s share cost plummeted some-more than 50%, and has usually recently begun to recover.

As of Wednesday, there were signs Opera might be jolt off Hindenburg’s news — during slightest in a marketplace — as a company’s shares had rebounded to $7.35.

Update: This essay was updated for a matter by Google post-publication. 

Revisiting Jumia’s JForce liaison and Citron’s short-sell claims

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