DEAL: Rise Fund to invest $200 million in Airtel’s mobile money business

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Rise Fund’s $200 million investments values AMC BV at $2.65 billion

Airtel Africa Plc, through a press release dated March 18, 2021, revealed Rise Fund’s intention to invest $200 million in the company’s mobile money business named ‘Airtel Mobil Commerce BV (“AMC BV”)’. AMC BV is currently wholly owned by the telecommunications giant. The business caters to a large addressable market in Africa, particularly those with limited access to banks and other financial institutions

Some of its services include mobile wallet deposits and withdrawals, merchant and commercial payments, benefits transfers, loans and savings, virtual credit cards, and international money transfers. Airtel’s mobile money business presently operates in 14 different countries through partnership local banks. The company has applied for its own banking license and intends to consolidate all its mobile money operations to be owned and managed by AMC BV.

The transaction values AMC BV at $2.65 billion on a cash and free basis (Airtel Nigeria is valued at about N3.49 trillion or $8.3b). Rise Fund will be investing $200 million, while Airtel Africa holds the majority stake at the completion of the transaction.

Besides Rise Fund, Airtel is in talks with other potential investors to increase the minority stake in the business up to 25% of the issued share capital.

Details of the $200 million investment

  • The $200 million investment will be done through Rise Fund’s newly incorporated vehicle (TPG) and the purchase will be in 2 stages.
  • A sum of $150 million will first be transferred to AMC BV. At the completion of the transfer of sufficient mobile money operations and contracts into AMC BV (first close), the remaining $50 million will be invested at a second close upon further transfers. It is expected that the transaction will reach its first close in the next 3 to 4 months.
  • Airtel aims to explore the possibility of listing the mobile money business within four years of operation. In the event that the business is not listed within four years, Rise Fund’s firm TPG would have the option to either sell its stake to Airtel Africa or acquire maximum shares in AMC BV such that the consideration does not exceed $400 million.
  • Proceeds from the transaction will be used to reduce the Airtel Group’s debt and invest in network and sales infrastructure in the respective operating countries.

Mobile Money Service Segment Performance in Q3 2020

  • Generated revenue of $110 million.
  • Achieved an EBITDA margin of 48.7% with an EBITDA of $54 million.
  • Revenue grew by 41.1% (constant currency) on the back of 29% growth in customer base to 21.5 million and 9.7% ARPU growth.
  • Transaction value grew to $12.8 billion (+53.0%).

In the statement, Airtel revealed its strategy to continue to drive sustainable long-term growth in Airtel Money with a focus on assured float availability, distribution expansion, and increased usage cases for its customers.

The company also stated that they have secured 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.

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