Rise Fund, an alternative investment platform to TPG’s investment platform, has entered into a $ 200 million investment agreement in Airtel Mobile Commerce BV (AMC BV), a wholly owned subsidiary of Airtel Africa Plc. The transaction estimates Airtel Africa’s mobile money business at $ 2.65 billion without cash and without debt.
Rise Fund will hold a minority stake in AMC BV upon completion of the transaction, while Airtel Africa will continue to hold the remaining majority stake. The transaction is subject to normal closing conditions, including the necessary regulatory notifications and approvals and the inclusion of certain assets and mobile money contracts in AMC BV, the company said in a statement.
The proceeds will be used to reduce the group’s debt and invest in network and sales infrastructure in the respective operating countries.
The newly included investment instrument of the Rise Fund will invest $ 200 million through the secondary purchase of AMC BV shares from Airtel Africa. The transaction will be concluded in two phases, with the first closing invested $ 150 million. When the transfer of a sufficient number of operations and contracts with mobile money to AMC BV is completed, $ 50 million should be invested, it is stated in the announcement.
The agreement is expected to be concluded in the next 3-4 months. From the first closure, The Rise Fund will have the right to appoint a director to the board of AMC BV and certain customary information and minority protection rights.
“In line with our vision of improving financial inclusion, Airtel Africa offers a unique digital mobile financial services platform under the Airtel Money brand. In most of our markets, access to traditional financial institutions and little banking infrastructure is limited, with less than half the population having a bank account across sub-Saharan Africa. “Our markets therefore provide significant market potential for mobile money services to meet the needs of tens of millions of customers in Africa who have little or no access to banking and financial services, and this demand is driving growth,” said Raghunath Mandava, CEO of Airtel Africa.
The transaction is the latest step in the Group’s search for strategic asset cashing and investment opportunities, and Airtel Africa wants to explore a potential list of mobile money business within four years. The Group is in talks with other potential investors regarding possible further minority investments in Airtel Money, up to a total of 25 per cent of the issued share capital of AMC BV. However, there is no certainty that the transaction will be concluded, he added.
Airtel Africa is a provider of telecommunications and mobile money services and is present in 14 countries across Africa, and AMC BV is currently the holding company for several Airtel Africa mobile money operations. AMC BV now intends to own and operate mobile money companies in 14 Airtel Africa operating countries.