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The Rise Fund, alternative investment firm TPG’s impact investing platform, has entered into an agreement to invest $200 million in Airtel Mobile Commerce BV (AMC BV), a wholly-owned subsidiary of Airtel Africa Plc. The transaction values Airtel Africa's mobile money business at $2.65 billion on a cash and debt-free basis.
The Rise Fund will hold a minority stake in AMC BV upon completing the transaction, with Airtel Africa continuing to hold the remaining majority stake. The transaction is subject to customary closing conditions, including necessary regulatory filings and approvals and the inclusion of specified mobile money business assets and contracts into AMC BV, the company said in a statement.
The proceeds will be used to reduce group debt and invest in network and sales infrastructure in the respective operating countries.
The Rise Fund’s newly incorporated investment vehicle will invest $200 million through a secondary purchase of shares in AMC BV from Airtel Africa. The transaction will close in two stages, with $150 million invested at the first close. Once the transfer of sufficient mobile money operations and contracts into AMC BV has been completed, $50 million to be invested, it said.
The deal is expected to reach its first close over the next 3-4 months. From the first close, The Rise Fund will be entitled to appoint a director to the board of AMC BV and certain customary information and minority protection rights.
"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,” Raghunath Mandava, CEO of Airtel Africa, said.
The transaction is the latest step in the Group's pursuit of strategic asset monetisation and investment opportunities, and Airtel Africa aims to explore the potential listing of the mobile money business within four years. The Group is in discussions with other potential investors concerning possible further minority investments into Airtel Money, up to a total of 25 per cent of the issued share capital of AMC BV. However, there is no certainty that a transaction will be concluded, it added.
Airtel Africa is a telecommunications and mobile money service provider and has a presence in 14 countries across Africa, and AMC BV is currently the holding company for several of Airtel Africa's mobile money operations. AMC BV now intendeds to own and operate mobile money businesses across Airtel Africa's 14 operating countries.
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