Airtel Money raises $200 million from The Rise Fund; now valued at $2.65 billion

Airtel Money, the brand name of Airtel Mobile Commerce BV (AMC) which is a wholly owned subsidiary of Airtel Africa, has raised $200 million from The Rise Fund, the global impact investing platform of leading alternative investment firm TPG.

Valuing the mobile money business at $2.65 billion on a cash and debt free basis, this transaction will provide The Rise Fund a minority stake in AMC BV 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 monetization 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 Group is in discussions with other potential investors in relation to possible further minority investments into Airtel Money, up to a total of 25% of the issued share capital of AMC BV. There can be no certainty that a transaction will be concluded or as to the final terms of any transactions.

Airtel intends to use the funds to reduce Group debt and invest in network and sales infrastructure in the respective operating countries.

Airtel Africa plc, a leading provider of telecommunications and mobile money services, with a presence in 14 countries across Africa, today announced the signing of an agreement under which The Rise Fund, the global impact investing platform of leading alternative investment firm TPG, will invest $200 million in Airtel Mobile Commerce BV, a wholly owned subsidiary of Airtel Africa plc. AMC BV is currently the holding company for several of Airtel Africa’s mobile money operations; and is now intended to own and operate the mobile money businesses across all of Airtel Africa’s fourteen operating countries.

Airtel Africa provides digital mobile financials services across the Group’s 14 operating countries including Nigeria where it offers the mobile money services through a a partnership with a local bank. It has however applied for its own mobile banking license in Nigeria.

The intention is that all mobile money operations will be owned and operated by AMC BV.

Airtel Africa mobile money services include mobile wallet deposit and withdrawals, merchant and commercial payments, benefits transfers, loans and savings, virtual credit card and international money transfers.

In recent reported Q3 results, the mobile money service generated revenue of $110 million ($440 million annualised), and underlying EBITDA of
$54 million ($216 million annualised) at a margin of 48.7%.

Year on year revenue growth for the quarter was 41.1% in constant currency, largely driven by 29% growth in the customer base to 21.5 million, and 9.7% ARPU growth. Growth in transaction value was 53.0% to $12.8 billion ($51 billion annualised).

The profits before tax in the full year ending 31 March 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.

Airtel Africa aims to explore the potential listing of the mobile money business within four years.

Raghunath Mandava, CEO of Airtel Africa, commented:

“In line with our vision of enhancing financial inclusion, Airtel Africa offers a unique digital mobile financial services platform under the Airtel Money brand. In most of our markets there is limited access to traditional financial institutions, and little banking infrastructure, with less than half of the population having a bank account across sub-Saharan Africa. Our markets therefore afford substantial market potential for mobile money services to meet the needs of the tens of millions of customers in Africa who have little or no access to banking and financial services, and this demand is driving growth.

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.”

Yemi Lalude, Partner at TPG who leads Africa investing for The Rise Fund, added:

“Financial inclusion is a global issue that is most acute in Africa. Through Airtel Money, Airtel Africa has built a unique platform that is closing the gap between traditional financial institutions and the millions of unbanked Africans across the 14 countries where Airtel Africa operates. We look forward to working with Airtel Africa to enhance their mobile money services, broaden its use cases, and grow into new markets. With this investment in Airtel Africa’s mobile money operations, we are excited to expand The Rise Fund’s global fintech portfolio and continue to deepen our focus on improving financial inclusion in Africa and around the world.”