Airtel Africa explores listing mobile money business in four years

TPG Rise Fund to invest $200 mn in the brand

Airtel Africa, an arm of Bharti Airtel, on Thursday said TPG’s The Rise Fund would invest $200 million in its mobile money business at a valuation of $2.65 billion. Airtel Africa also said it would explore potential listing of mobile money business within four years. The proceeds will be used to reduce group debt and invest in network and sales infrastructure in the respective operating countries.

Airtel Mobile Commerce BV is the holding company for several of Airtel Africa’s mobile money operations, and plans to own and operate the businesses across Airtel Africa’s 14 operating countries. The Rise Fund will hold a minority stake in AMC B.V. upon completion of the transaction, with Airtel Africa continuing to hold the remaining majority stake.

“The transaction is the latest step in the group’s pursuit of strategic asset monetisation and investment opportunities, and it is the aim of Airtel Africa to explore the potential listing of the mobile money business within four years,” Airtel said.

Raghunath Mandava, chief executive of Airtel Africa, said: “Our markets afford substantial potential for mobile money services to meet the needs of the millions of users in Africa who have little or no access to banking and financial services, and this demand is driving growth.” 

Airtel Africa Group is also in discussions with other potential investors to further minority investments into Airtel Money, up to a total of 25 per cent of the issued share capital of AMC BV. Operating under the Airtel Money brand, Airtel Africa's mobile money services is a leading digital mobile financial services platform catering to a market in Africa, which is characterised by limited access to formal financial institutions with limited banking infrastructure. It includes mobile wallet deposit and withdrawals, merchant and commercial payments, benefits transfers, loans and savings, virtual credit card, and international money transfers.

“With this investment, we are excited to expand The Rise Fund's global fin-tech portfolio and continue to deepen our focus on improving financial inclusion in Africa and around the world,” said Yemi Lalude, partner at TPG who leads Africa investing for The Rise Fund.

In the third quarter, the mobile money service segment (corresponding to all the businesses that are intended to be transferred to AMC BV) generated revenue of $110 million ($440 million annualised), and underlying Ebitda of $54 million ($216 million annualised) at a margin of 48.7 per cent.

The year-on-year revenue growth for the quarter was 41.1 per cent in constant currency, largely driven by 29 per cent growth in the customer base to 21.5 million, and 9.7 per cent ARPU growth.

Over the past year, the company partnered Mastercard, Samsung, Asante, Standard Chartered Bank, MoneyGram, Mukuru, and WorldRemit to expand both the range and depth of the Airtel Money offerings.

The profits before tax in the full year ended March 31, 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.