Multinational company; Airtel Africa has set a land in motion to sell 200 Million United States Dollars worth of Equity in its mobile cash business to TPG which is a Global private equity establishment. The sale will be carried out through The Rise Fund and will make it possible for TPG to own a portion of Airtel Africa’s Airtel Mobile Money business.
Airtel Africa which provides telecommunications and mobile money services in 14 countries in Africa, primarily in East, Central and West Africa, intends to use the proceeds from the sale to invest in sales and network infrastructure in the 14 countries where it operates, as well as reduce Group debt.
Airtel Africa which is a part of the Bharti Airtel Group owned by billionaire; Sunil Mittal, completely owns Airtel Mobile Money.
According Airtel Africa this sale, is the latest in its moves towards investment opportunities and asset monetization. The telecommunications giant intends to list its mobile money business within 4 years.
The sale will be carried out in 2 stages. The Rise Fund will first invest 150 million United States Dollars as soon as the transfer of needed contracts and mobile money operations into Airtel Mobile Money are completed.
The Rise Fund will then invest 50 million United States Dollars at the second close once further transfers are completed. The transaction is projected to hit the first close in the next 3 to 4 months.
Included in the terms of the transaction is the clause that if the firm is unable to float an IPO (Initial Public Offering) within 4 years TPG will be given the option to sell its shares in Airtel Mobile to Airtel Africa or any of its affiliates.
If it chooses this option, it will get not more than 400 million United States Dollars and not less than 200 million United States Dollars excluding any dividends or proceeds from the sale of shares.
Yemi Laude who is a partner at TPG and leads Africa investing for The Rise Fund made it known that the deal will expand TPG’s global fintech portfolio while also intensifying its focus on improving financial inclusion worldwide, as well as in Africa.
The Rise Fund which is based in San Francisco has under its management, 5 billion United States Dollars. It is known to place a focus on opportunities in food and agriculture, education, financial technology, the energy sector, the technology sector and the healthcare sector.
Airtel Africa as stated earlier, provides mobile money services and telecommunications services majorly in Central Africa, East Africa, and West Africa.
Airtel Africa is reportedly in talks with a number of other potential investors in a bid to dilute a 25 percent stake in Airtel Mobile. Airtel Africa through its Airtel Money brand, offers mobile money services.
Airtel Africa through Airtel Money, offers mobile money wallet withdrawals and deposits, as well as commercial payments, merchant payments, savings, loans, benefits transfers, international money transfers, and virtual credit card.
Airtel Money is currently available in all of the 14 countries where Airtel Africa has operations. For Nigeria however, Airtel Money offers its mobile money services via a partnership with a local bank. It has however also applied for its mobile banking license.
Airtel Africa currently has partnerships with Asante, WorldRemit, Mastercard, Mukuru, MoneyGram, Samsung, and Standard Chartered Bank, to help implement its offerings.
For the quarter that ended on the 31st of December 2020 the mobile money service section flaws able to generate a revenue of 110 million United States Dollars. Its Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) stood at 54 million United States Dollars. What this means is that it has an annualized revenue of 440 million United States Dollars and an annualized Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of 216 million United States Dollars.
Its quarterly revenue increased by 41.1 percent from the year prior in constant currency terms. This was driven by a 29 percent boost in the customer base to 21.5 million as well as a 9.7 percent boost in the average revenue per user.
It’s quarterly transaction value also increased by 53 percent to 12.8 billion United States Dollars.
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