Airtel Africa and Mastercard have signed an agreement in which the global payments provider will invest $100 million in Airtel Mobile Commerce BV (AMC BV), Airtel Africa’s Mobile. Upon completing the transaction, Mastercard will own a minority stake of 3.775% in Airtel Mobile Commerce BV.
Mastercard joins TPG’s Rise Fund, which invested $200 million in Airtel Mobile Commerce BV in exchange for a 7.55% stake.
Details of the Airtel Mobile Commerce Investment
Mastercard will invest the $100 through a secondary purchase of shares from Airtel Africa. The investment will close in two stages: a $75 million in the first tranche “once the transfer of sufficient mobile money operations and contracts into AMC BV has been completed,” followed by a $25 million close. The first transaction will close over the next 3 to four months.
The investment will not change Airtel Mobile Commerce BV valued at $2.65 billion on a cash and debt-free basis.
The deal is in the backdrop of a potential listing of Airtel Africa’s Mobile Money business in four years. Should the IPO fail, Mastercard has the option of selling its shares to Airtel Africa or its affiliates at fair market value, at a minimum price of the consideration paid by Mastercard for the stake, and a maximum number of shares valued at less than $200 million.
The two companies also extended their commercial agreements and signed a new commercial framework, deepening their collaboration in card issuance, payment processing, remittances, and payment gateway, among other areas.
“We are significantly strengthening our existing strategic relationship with Mastercard to help us both realise the full potential from the substantial opportunity to improve financial inclusion across our countries of operation,” said Raghunath Mandava, CEO of Airtel Africa. “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.”
A Journey Towards Airtel Mobile Commerce IPO
Today’s deal is another step in Airtel’s journey to increase its minority shareholding, eyeing an IPO in the next four years, which will give Airtel Mobile Commerce BV company ownership and the operation of Airtel’s mobile money in 14 African countries.
Both TPG and Mastercard’s deal gear build towards the larger scheme of Airtel Africa’s pursuit of strategic asset monetisation and investment opportunities, ultimately geared towards debt reduction. Besides selling up to 25% of the minority stake in its mobile money arm, Airtel Africa also selling its 1424 towers in Madagascar and Malawi for $129 million. The group also signed agreements with Helios to trade towers in Chad and Gabon.
“With today’s announcement, we are pleased to welcome Mastercard as an investor in our mobile money business, joining The Rise Fund which we announced two weeks ago. 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.”
Raghunath Mandava
Proceeds from the TPG, Helios and Mastercard deal will be used to reduce the group’s debt and finance investments into network and sales infrastructure in its operating countries.
