Airtel Africa ( NGSE:AIRTELAFRI , MSE:AIRTEL ) is set to sell an undisclosed minority stake in its Pan-African mobile money business to private equity firm TPG for $200 million (Sh21.9 billion), underlining the huge value of mobile financial service platforms.
The multinational announced the transaction Thursday through the London Stock Exchange where it is listed.
The record-breaking deal values Airtel Money, available in Share sale to private equity comes amid struggle to cut M-Pesa dominance in the Kenyan market 14 African countries including Kenya, Malawi and Uganda, at $2.65 billion (Sh291 billion).
TPG is investing in Airtel Money through its investment vehicle The Arise Fund.
“With today’s announcement we are pleased to welcome The Rise Fund as an investor in our mobile money business and as a partner to help us realise the full potential from the substantial opportunity to bank the unbanked across Africa,” Raghunath Mandava, CEO of Airtel Africa, said in a statement yesterday.
The transaction indicates that the rival M-Pesa platform, available in Kenya and five other African markets such as Tanzania and Mozambique, could be valued even higher.
Airtel Money generated revenues of $548 million (Sh60.1 billion) in the African markets in the six months ended September 2020 when active users of the platform stood at 21 million.
M-Pesa had 55 million customers and its total revenue, including Kenya, over the same period stood at R8 billion (Sh59.5 billion).
Airtel says the cash raised from the deal with TPG, expected to be completed in four months, will be used to reduce debt and invest in network and sales infrastructure in the respective operating countries.
The Arise Fund is investing in Airtel Money in two stages that will see it pay an initial $150 million and later $50 million.
The fund will buy the undisclosed stake in Airtel Mobile Commerce BV (AMC BV) – the company that will own and operate the mobile money business across all of the multinational’s 14 markets in Africa.TPG has also been given the option to sell its stake back to Airtel in the future at a maximum price of $400 million (Sh43.9 billion) or double what it is investing now.“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,” the telecoms operator said in a statement.“The group is in discussions with other […]
