Airtel Africa has announced the signing of an agreement under which Mastercard will invest Ksh. 1.09 billion ($100 million) in Airtel Mobile Commerce BV (AMC BV).
AMC BV is currently the holding company for several of Airtel Africa’s mobile money operations. The company is now intended to own and operate the mobile money businesses across all of Airtel Africa’s fourteen operating countries. The Transaction values Airtel Africa’s mobile money business at Ksh. 289 billion ($2.65 billion) on a cash and debt free basis.
Mastercard will hold a minority stake in AMC BV upon completion of the Transaction, with Airtel Africa continuing to hold the majority stake. The Transaction is subject to customary closing conditions including necessary regulatory filings and approvals, and the transfer of specified mobile money business assets and contracts into AMC BV.
Alongside the investment, the Group and Mastercard have extended commercial agreements across numerous geographies and areas including card issuance, payment gateway, payment processing, merchant acceptance and remittance solutions.
Following the recent announcement of Ksh. 22 billion ($200 million) investment in AMC BV by TPG’s The Rise Fund, the Transaction is a continuation of the Group’s pursuit of asset monetization and investment opportunities. As previously announced, Airtel Africa aims to continue to monetize its mobile money business with minority investments up to a total of 25% of the issued share capital of AMC BV.
The proceeds from the Transaction will be used to reduce Group debt and invest in network and sales infrastructure in the 14 operating countries. In Nigeria, however, the Group offers Airtel Money services through a partnership with a local bank and has applied for its own mobile banking license. It is the intention that all mobile money operations will be owned and operated by AMC BV.
This year, Airtel has added partnerships with Samsung, Asante, Standard Chartered Bank, MoneyGram, Mukuru and WorldRemit. These partnerships aim to expand both the range and depth of the Airtel Money offerings and to further drive customer growth and penetration.
The Transaction is expected to reach first close over next three to four months. From first close, Mastercard will be entitled to certain customary information and minority protection rights.
Raghunath Mandava, CEO of Airtel Africa, commented, “This is a continuation of our strategy to increase the minority shareholding in our mobile money business with the further intention to list this business within four years. The combination of our extensive customer base and distribution platforms and Mastercard’s products and services, innovation and know how, mean we can together accelerate demand and drive growth in financial services for the benefit of all our customers and markets.”