Wireless operator, Airtel Africa, whose mobile money business on the continent is currently valued at $2.65 billion on a cash and debt free basis, has entered an equity acquisition pact with The Rise Fund, the global impact investing platform of leading alternative investment firm TPG, in a transaction that will see the latter take ownership of a minority stake in the business.
“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 said in a note to the Nigerian Stock Exchange on Thursday, seen by PREMIUM TIMES.
The transaction estimated to be $200 million enables The Rise Fund to part-own Airtel Mobile Commerce BV, the holding company of most of Airtel Africa’s mobile money operations, which is now looking to own and run the mobile money businesses across all of the telco’s fourteen operating countries.
“The Transaction is the latest step in the Group’s pursuit of strategic asset monetization and investment opportunities, and it is the aim of Airtel Africa to explore the potential listing of the mobile money business within four years,” Airtel said in the statement signed by Group Company Secretary Simon O’Hara.
“The Group is in discussions with other potential investors in relation to possible further minority investments into Airtel Money, up to a total of 25% of the issued share capital of AMC BV.”
In the third quarter of last year, the African unit of New-Delhi based Bharti Airtel Limited posted revenue of $110 million ($440 million annualised) and an underlying earnings before interest, taxes, depreciation and amortisation of $54 million ($216 million annualised) at a margin of 48.7 per cent.
It translates to a year-on-year revenue growth of 41.1 per cent for the quarter in constant currency, essentially driven by 29 per cent growth in customer base to 21.5 million.
“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,” said CEO Raghunath Mandava.
“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.”
Yemi Lalude, partner at TPG, 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.”
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