African mobile money business Airtel Africa secured $100m from credit card giant, Mastercard.
The transaction, which values the subsidiary Airtel Mobile Commerce (AMC BV) at $2.65bn, follows a $200m investment in the company by TPG’s Rise Fund two weeks ago. Both TPG and Mastercard now have minority stakes of 7.55% and 3.77%, respectively, in the company.
The investment from Mastercard in the mobile money business arm of Airtel Africa demonstrates the rapid growth in Africa’s digital payment sector. Alongside the investment, Airtel Africa and Mastercard extended commercial agreements and signed a new commercial framework which will deepen their partnerships across numerous geographies and areas including card issuance, payment gateway, payment processing, merchant acceptance and remittance solutions, amongst others.
The funding round is notably subject to customary closing conditions including necessary regulatory filings and approvals, and the transfer of specified mobile money business assets and contracts into AMC BV.
The cash injection will be used to reduce its debt and invest in network and sales infrastructure in the respective operating countries in Africa. The funding will also further Airtel Group’s pursuit of strategic asset monetisation and investment opportunities.
With the aim to make financial services accessible to people who do not have formal bank accounts, Airtel Africa plans to continually monetise its mobile money business with minority investments up to a total of 25% of the issued share capital of AMC BV as well as explore the potential listing of the mobile money business within four years, it said.
Founded in 2010, Airtel Africa provides telecommunications and mobile money services including mobile voice and data services both nationally and internationally. The firm boasts of presence in 14 countries in Africa, primarily in East Africa and Central and West Africa.
Commenting on the round, Airtel Africa CEO Raghunath Mandava said, “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. We are significantly strengthening our existing strategic relationship with Mastercard to help us realise the full potential from the substantial opportunity to improve financial inclusion across our countries of operation.”
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