Airtel Africa Sells Mobile Money Stake To TPG's Rise Fund

Airtel Africa has announced the signing of an agreement under which The Rise Fund, the global impact investing platform of TPG, will invest USD 200 million in Airtel Mobile Commerce.

“The Rise Fund, the global impact investing platform of leading alternative investment firm TPG, will invest $200 million in Airtel Mobile Commerce BV ("AMC BV"), a wholly-owned subsidiary of Airtel Africa plc (the "Transaction"),” Airtel said in an exchange filing on Thursday.

The investment will see the mobile money business —  Airtel Mobile Commerce BV (AMC BV) — valued at $2.65 billion

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“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 of Airtel Africa's fourteen operating countries,” Airtel said.

Raghunath Mandava, CEO of Airtel Africa, comments: "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 the 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."

Under the deal with TPG, Airtel Africa will continue to hold a majority stake in the mobile money unit, with plans to explore an IPO within the next four years

In February, the London-listed telecom said it was looking to sell a minority stake in its mobile money business in a bid to raise cash and sell off some assets.

AMC BV says the holding company will use the investment to reduce its debt and invest in network and sales infrastructure in the respective operating countries. The deal will close in two tranches — $150 million invested at the first close, with $50 million to be invested at the second close.

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The group said it is in discussions with other potential investors in relation to possible further minority investments in Airtel Money, up to a total of 25% of the issued share capital of AMC. However, the group said, "there can be no certainty that a transaction will be concluded or as to the final terms of any transactions".

Airtel's mobile money business, one of the many players driving financial inclusion across the continent, offers a range of services. They include mobile wallet deposits and withdrawals, merchant and commercial payments, benefits transfers, loans and savings, virtual credit cards, and international money transfers. 

Typically, these services are present across countries of operation except Nigeria. In the West African country, Airtel has gone through the route of partnering with local banks but has now applied for its own mobile banking license.

The company currently counts 21 million users for its suite of mobile payment services, generating revenue of $110 million in the most recent quarter, and underlying Ebitda of $54 million.

Yemi Lalude, a partner at TPG who leads Africa investing for The Rise Fund, said that with financial inclusion being a global issue that is most acute in Africa, Airtel closing the gap between traditional financial institutions and the millions of unbanked Africans.

“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,” she said.