OPay's reported $4 billion valuation works out to 22 times annualised first-half profit

Both reports say lending is now OPay's largest income line ^[1]. Neither says by how much. The coverage of the F-1 does not include lending revenue, loan balances or credit losses, so the $467 million of first-half revenue ^[2] cannot be split into a lending part and a payments part.

The margin can be computed. A 137% rise to $467 million implies about $197 million in the first half of last year ^[15], and $91 million of net income ^[3] is 19.5% of this half's revenue ^[16]. If "more than 300%" is the increase, as the wording says, last year's net income was under $22.75 million and the margin under roughly 11.5% ^[19]. The margin nearly doubled, and lending is now the larger line. We think that is how a fast-growing loan book looks before its defaults arrive, since a lender books interest first and losses later. It is also the way this thesis could be wrong: if the F-1 shows short-dated loans with low credit costs, the margin is earned and the shift to lending is simply good news.

The price is not in the filing. The roughly $4 billion comes from earlier reports ^[21], and OPay had not disclosed a range ^[9]. Taken at face value, $4 billion is about 22 times annualised net income of $182 million ^[17] and 4.3 times annualised revenue of $934 million ^[18]. Both assume the second half repeats the first. A loan book can miss that in either direction.

There are three ways it goes. Credit costs stay low, and 22 times looks modest against profit growth above 300%. Credit costs catch up, annualised profit is too high, and the true multiple is higher. Or the IPO is priced on revenue at 4.3 times and the earnings multiple matters later. We lean toward the second, and would change our mind on seeing credit costs in the F-1 that are small against the $91 million.

Standard Bank's money fits the same valuation. Stanbic's investment of up to $200 million ^[6] matches its cap at $4 billion, because 4.99% of $4 billion is $199.6 million ^[20]. The coverage describes the formula only as a cap, so the fit may be coincidence. Lungisa Fuzile, Standard Bank's Africa head, is expected to join the board after the IPO ^[7], and Semafor describes Standard Bank as Africa's largest lender by assets ^[8].

OPay took off in Nigeria in 2019 with super-app ambitions that included motorcycle taxi bookings, food deliveries and quick loans, and it has since narrowed to financial services ^[12]. It raised $570 million in venture funds between 2018 and 2021 ^[13].