Airtel Africa Secures $200M Investment for Mobile Money Business

Airtel Africa Secures $200 Million Investment for Mobile Money Arm

Mastercard invested $100 million in Airtel Mobile Commerce BV (AMC BV) – the mobile money division of Airtel Africa – three months ago. This followed a $200 million investment received from TPG’s Rise Fund just two weeks prior.

Today, Airtel Africa announced another investment secured for its mobile money business. The investment comes from Qatar Holding LLC, an affiliate of the Qatar Investment Authority (QIA), Qatar’s sovereign wealth fund, which manages assets exceeding $300 billion.

Details of the Investment

The Middle Eastern entity is poised to inject $200 million into AMC BV through a secondary share purchase from Airtel Africa. This transaction will provide further capital for expansion and development.

AMC BV functions as a subsidiary of Airtel Africa and serves as the holding company for the group’s mobile money operations across 14 African nations, including Kenya, Uganda, and Nigeria.

The mobile money platform is a leading financial service provider on the continent, offering users access to mobile wallets, international money transfer capabilities, loan facilities, and virtual credit cards.

Use of Funds and Transaction Structure

According to a statement from the telecoms operator, the investment proceeds will be allocated to debt reduction and enhancements to network and sales infrastructure within its operating countries.

The deal will be executed in two phases. An initial investment of $150 million is anticipated to be completed in August, with the remaining $50 million following in a second tranche.

Airtel Africa will retain its majority stake, while QIA will acquire a minority holding. The transaction maintains a valuation of Airtel Africa at $2.65 billion on a cash and debt-free basis.

Notably, QIA will gain the right to appoint a director to the AMC BV board and will be granted standard information and minority shareholder protection rights.

Recent Performance and Growth

Airtel Africa’s Q1 2021 report demonstrates positive growth trends. The company reported a year-over-year revenue increase of 53.7%, driven by a 24.6% expansion of its customer base to 23.1 million.

Transaction values surged by 64.4% to $14.7 billion (annualized at $59 billion), and EBITDA reached $60 million (annualized at $240 million) with a margin of 48.8%.

Revenue generated totaled $124 million (annualized at $496 million), and profit before tax for Q1 2021 amounted to $185 million.

Statements from Key Figures

Mansoor bin Ebrahim Al-Mahmoud, CEO of QIA, stated that the sovereign wealth fund’s investment in Airtel Africa will contribute to greater financial inclusion in sub-Saharan Africa.

He added, “Airtel Money plays a crucial role in enabling economic activity, particularly for individuals lacking access to conventional financial services. We are confident in its ability to broaden these efforts in the years ahead.”

Strategic Asset Management

Airtel Africa initially signaled its intention to divest a minority stake in AMC BV in February to generate capital and streamline its asset portfolio.

The following month, it sold telecommunication towers in Madagascar and Malawi to Helios Towers for $119 million and secured $500 million from external investors.