The Rise Fund Eyes $200m Investment In Airtel Africa’s Mobile Money
- Assets valuation put at $2.65bn
BY CHINYERE OBIORA, LAGOS – Leading provider of telecommunications and mobile money services, Airtel Africa, has signed an agreement for The Rise Fund to invest about $200 million in Airtel Mobile Commerce BV (AMC BV), a wholly owned subsidiary of Airtel Africa plc.
The Rise Fund is the global impact investing platform of foremost alternative investment firm, TPG Capital, previously known as Texas Pacific Group
The planned transaction will close in two stages, $150 million being invested at first close once the transfer of sufficient mobile money operations and contracts into AMC BV has been completed, with $50 million investment at the second close upon further transfers.
AMC BV is currently the holding company for several of Airtel Africa’s mobile money operations; and is now intended to own and operate the mobile money businesses across all Airtel Africa’s 14 operating countries.
Existing transaction values Airtel Africa’s mobile money business at $2.65 billion on a cash and debt free basis.
According to Airtel, the Rise Fund will hold a minority stake in AMC BV upon completion of the Transaction, with Airtel Africa continuing to hold the remaining majority stake.
However, the transaction is subject to customary closing conditions, including necessary regulatory filings and approvals, as necessary and the inclusion of specified mobile money business assets and contracts into AMC BV.
Going forward, Airtel Africa aims to explore the potential listing of the mobile money business within four years.
Under the transaction’s terms 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.
The business 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.
Already, 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 per cent of the issued share capital of AMC BV.
Airtel however said the proceeds from the Transaction will be used to reduce group debt and invest in network and sales infrastructure in the respective operating countries.
The profits before tax in the full year ending 31 March 2020 and the value of gross assets as of that date, attributable to the mobile money businesses were $143.4 million and $463.2 million, respectively.
In this year alone Airtel have added partnerships with Mastercard, Samsung, Asante, Standard Chartered Bank, MoneyGram, Mukuru and WorldRemit to expand both the range and depth of the Airtel Money offerings and to further drive customer growth and penetration.
