Global impact investing platform, The Rise Fund, is set to invest $200 million in Airtel Africa’s mobile money business. The telecom operator with operations in Nigeria and 13 other African countries, said the mobile money business, Airtel Mobile Commerce BV (AMC BV), will now own and operate the mobile money businesses across all of the telco’s 14 operating countries.
The transaction, Airtel said, is the latest step in the Group’s pursuit of strategic asset monetisation and investment opportunities. It added that the Group is also in discussions with other potential investors in relation to possible further minority investments into Airtel Money, up to a total of 25 per cent of the issued share capital of AMC BV.
With the new investment, Airtel Africa said it would explore the potential listing of the mobile money business within four years. For the latest transaction, the business was valued at $2.65 billion on a cash and debt-free basis.
“The proceeds from the transaction will be used to reduce Group debt and invest in network and sales infrastructure in the respective operating countries. Airtel Africa’s mobile money services is a leading digital mobile financial services platform catering to a large addressable market in Africa characterised by limited access to formal financial institutions with limited banking infrastructure and includes mobile wallet deposit and withdrawals, merchant and commercial payments, benefits transfers, loans and savings, virtual credit card and international money transfers,” Airtel stated.
While noting that the mobile money services are available across its 14 countries of operation, Airtel said the service is currently being offered through a partnership with a local bank in Nigeria. To commence a full mobile money operation in Nigeria after the fund injection, the company said it has applied for its own mobile banking licence.
“Airtel Africa aims to explore the potential listing of the mobile money business within four years. Under the terms of the transaction, and in very limited circumstances, in the event that there is no Initial Public Offering of shares in AMC BV within four years of first close, or in the event of changes of control without TPG’s prior approval, TPG would have the option, so as to provide liquidity to them, to sell its shares in AMC BV to Airtel Africa or its affiliates at fair market value determined by a mutually agreed merchant bank using an agreed internationally accepted valuation methodology,” Airtel said.
“The Transaction is expected to reach first close over the next three to four months. From first close The Rise Fund will be entitled to appoint a director to the board of AMC BV and to certain customary information and minority protection rights,” the company added.
Commenting on the deal, CEO of Airtel Africa, Raghunath Mandava, said: “In line with our vision of enhancing financial inclusion, Airtel Africa offers a unique digital mobile financial services platform under the Airtel Money brand. In most of our markets there is limited access to traditional financial institutions, and little banking infrastructure, with less than half of the population having a bank account across sub-Saharan Africa. Our markets therefore afford substantial market potential for mobile money services to meet the needs of the tens of millions of customers in Africa who have little or no access to banking and financial services, and this demand is driving growth. With today’s announcement we are pleased to welcome The Rise Fund as an investor in our mobile money business and as a partner to help us realise the full potential from the substantial opportunity to bank the unbanked across Africa.”
Also speaking, Partner at TPG who leads Africa investing for The Rise Fund, Yemi Lalude, said: “Financial inclusion is a global issue that is most acute in Africa. Through Airtel Money, Airtel Africa has built a unique platform that is closing the gap between traditional financial institutions and the millions of unbanked Africans across the 14 countries where Airtel Africa operates. We look forward to working with Airtel Africa to enhance their mobile money services, broaden its use cases, and grow into new markets. With this investment in Airtel Africa’s mobile money operations, we are excited to expand The Rise Fund’s global fintech portfolio and continue to deepen our focus on improving financial inclusion in Africa and around the world.”